Comeback complete, Republican Sanford could be wild card in Congress

By John Whitesides

WASHINGTON (Reuters) - Fresh off a redemptive win in South Carolina's special election, former Governor Mark Sanford's return to Congress will make him a prominent wild card in an already fractious Republican caucus.

Sanford, whose political career was short-circuited in 2009 by an extramarital affair that marred his last 18 months as governor, earned a political rebirth along with a seat in the U.S. House of Representatives on Tuesday by defeating Democrat Elizabeth Colbert Busch.

Sanford will arrive in Washington owing little to the Republican Party's leadership, which withheld its support as he battled Colbert Busch in their heavily Republican district. Once he returns to the House seat he held from 1995 to 2001, his independence and staunch fiscal conservatism could give him clout as Congress enters another round of divisive battles over the federal budget.

"There is obviously the potential for Sanford to be a real thorn in (the House Republican) leadership's side," Republican strategist Ford O'Connell said. "He's a free agent; he can do whatever he wants."

The House Republican campaign committee did not give any financial support to his bid for a political comeback, but Sanford said on Wednesday he was willing to work with party leaders.

"I would say yesterday is yesterday and today is today, and I look forward to working with them," Sanford said on CBS's "This Morning" show.

Sanford's victory completed his comeback from a scandal that began when he disappeared for five days in June 2009 to secretly visit his mistress in Argentina. He had told his staff that he would be hiking along the Appalachian Trail.

In launching his comeback, Sanford - now divorced from Jenny Sanford and engaged to Maria Belen Chapur, the Argentinian woman with whom he had the affair - survived a 16-way Republican primary and a runoff in April. He then topped Colbert Busch in the race to succeed Republican Tim Scott, who was appointed to fill the U.S. Senate seat vacated when Jim DeMint retired.

The House Republican campaign committee dropped its financial support of Sanford last month after reports that his ex-wife had accused him of trespassing on her property, in violation of their divorce agreement. Sanford said he was in the house to watch the Super Bowl with his youngest son.

Sanford will appear in court in South Carolina on Thursday to answer the trespassing complaint before he heads to Washington to resume his career in Congress.

'PROVEN RECORD'

Sanford attributed his win to his record of fiscal conservatism. He said on Wednesday he will have "plenty of friends" in Washington and would work hard with members of both parties to cut the budget.

"At the end of the day, I think people care about how politics impacts their lives," he said on NBC's "Today" show. "I've got a rather proven record in trying to do something on that front, particularly as it relates to financial issues."

House Speaker John Boehner and other Republican leaders have had difficulty keeping conservative members in line during the budget debates. Sanford pushed hard to cut spending during his first stint in Congress, before the Tea Party movement made it a top priority for Republicans, and he can be expected to make his voice heard during the upcoming budget battles.

"He's been a little bit of a rebel. He's been more conservative than about 90 percent of Republicans based on his past voting record," said Gibbs Knotts, political science chairman at College of Charleston.

He also is likely to be around a while. The heavy Republican tilt of the coastal district, which Mitt Romney won by 18 percentage points last year in the presidential election, makes it unlikely that Democrats will be able to mount a viable challenge to Sanford anytime soon.

Both parties tried to make the best of Sanford's win, however. Republicans portrayed it as a sign of voter dissatisfaction with the agenda of national Democrats and President Barack Obama. Democrats said his election would undermine Republican efforts to appeal to women voters.

But analysts warned that, despite all the national attention to the race, the result probably revealed little about the broader mood of voters in the off-year between the 2012 presidential election and the 2014 congressional elections.

Sanford was able to link Colbert Busch to Washington liberals like House Democratic leader Nancy Pelosi, appearing at one point in a mock debate with a cardboard cutout of the liberal Pelosi.

"It was a triumph of demographics and ideology for Sanford. He took positions that were more in line with the district's Republican voters," Knotts said.

The Democratic House campaign committee and Democratic-leaning outside groups poured nearly $1 million into the race against Sanford. Despite the loss, they said Sanford's election made a mockery of Republican efforts to appeal to women.

"House Republicans' outreach to women voters now has Mark Sanford as the face," said Representative Steve Israel of New York, Democratic House campaign committee chairman. "Republicans now have to defend him and stand with him until election day."

Although they failed to support his campaign, national Republicans claimed it was a warning sign for Democrats looking toward the 2014 elections.

"At the end of the day, running on the Obama-Pelosi ticket was just too toxic for Elizabeth Colbert Busch," said Representative Greg Walden of Oregon, Republican House campaign committee chairman.

(Additional reporting by Harriet McLeod in South Carolina, Vicki Allen in Washington; Editing by David Lindsey and Cynthia Osterman)

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Former Chilean leader Bachelet seeking presidential comeback

By Alexandra Ulmer

SANTIAGO (Reuters) - Former Chilean President Michelle Bachelet ended months of speculation late on Wednesday by announcing she will run in a November presidential election that she is favored to win.

A popular center-leftist who ruled the copper-exporting nation from 2006 to 2010, Bachelet will likely face a candidate from the right-wing bloc of President Sebastian Pinera, who is barred from seeking a consecutive term under the constitution.

Front-runners for the ruling coalition's candidacy are charismatic businessman and former Public Works Minister Laurence Golborne and former Defense Minister Andres Allamand, a seasoned politician.

"I've taken some time to think about this decision ... And with happiness, with determination and much humility, I've taken the decision to be a (presidential) candidate," Bachelet said to cheers during a speech in Santiago, days after she quit her job as the head of U.N. Women.

Bachelet's return after months of speculation is a great relief to her fractured left-wing coalition, which Pinera ousted from a 20-year rule. She is expected to face little competition in the primaries.

Bachelet, a pediatrician-turned-politician, was one of Chile's most popular presidents.

Voters liked her affable manner, welfare policies and credited her for solid economic growth in one of Latin America's most stable, business-friendly countries.

Her high-profile U.N. post and time away from local politics have boosted her popularity, political analysts say, and opinion polls show her with a wide lead over other potential candidates.

In a poll published in January by local pollster CEP, 49 percent of those surveyed said they wanted Bachelet to be Chile's next president, versus 11 percent for Golborne and 5 percent for Allamand.

But analysts warn Bachelet's large lead will likely ebb during what looks set to be a heated campaign.

Whoever is elected on November 17 or in a potential run-off on December 15 will face demands for improved distribution of a mining bonanza in the world's No. 1 copper producer.

While Chile's economy grew a robust 5.6 percent last year and unemployment is at a six-year low, the country has the steepest income inequality among Organization for Economic Cooperation and Development states.

Bachelet on Wednesday centered her speech on combating inequality, saying deep reforms were needed for Chile to become a developed country. Education, energy policy and wages are key electoral issues.

Chile's open economy and its solid institutions are expected to remain broadly intact regardless of who governs until 2018.

A single mother of three and a victim of torture under Augusto Pinochet's dictatorship, Bachelet was one of conservative Chile's most unusual leaders since the return to democracy in 1990.

Critics said too much of her appeal was based on personality. Others in the wide-ranging leftist bloc blasted her for not pushing through bolder social reforms.

Bachelet's legacy was tainted by a slow response on providing aid and halting looting after a devastating 8.8-magnitude earthquake hit at the end of her term in February 2010.

She faced sharp criticism over the failure of the navy's catastrophe-alert system to warn of the ensuing tsunami, leaving hundreds who survived the quake to be engulfed by huge waves that followed.

(Writing by Alexandra Ulmer; Editing by Helen Popper and Stacey Joyce)

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Former Chilean leader Bachelet seeking presidential comeback

By Alexandra Ulmer

SANTIAGO (Reuters) - Former Chilean President Michelle Bachelet ended months of speculation late on Wednesday by announcing she will run in a November presidential election that she is favored to win.

A popular center-leftist who ruled the copper-exporting nation from 2006 to 2010, Bachelet will likely face a candidate from the right-wing bloc of President Sebastian Pinera, who is barred from seeking a consecutive term under the constitution.

Front-runners for the ruling coalition's candidacy are charismatic businessman and former Public Works Minister Laurence Golborne and former Defense Minister Andres Allamand, a seasoned politician.

"I've taken some time to think about this decision ... And with happiness, with determination and much humility, I've taken the decision to be a (presidential) candidate," Bachelet said to cheers during a speech in Santiago, days after she quit her job as the head of U.N. Women.

Bachelet's return after months of speculation is a great relief to her fractured left-wing coalition, which Pinera ousted from a 20-year rule. She is expected to face little competition in the primaries.

Bachelet, a pediatrician-turned-politician, was one of Chile's most popular presidents.

Voters liked her affable manner, welfare policies and credited her for solid economic growth in one of Latin America's most stable, business-friendly countries.

Her high-profile U.N. post and time away from local politics have boosted her popularity, political analysts say, and opinion polls show her with a wide lead over other potential candidates.

In a poll published in January by local pollster CEP, 49 percent of those surveyed said they wanted Bachelet to be Chile's next president, versus 11 percent for Golborne and 5 percent for Allamand.

But analysts warn Bachelet's large lead will likely ebb during what looks set to be a heated campaign.

Whoever is elected on November 17 or in a potential run-off on December 15 will face demands for improved distribution of a mining bonanza in the world's No. 1 copper producer.

While Chile's economy grew a robust 5.6 percent last year and unemployment is at a six-year low, the country has the steepest income inequality among Organization for Economic Cooperation and Development states.

Bachelet on Wednesday centered her speech on combating inequality, saying deep reforms were needed for Chile to become a developed country. Education, energy policy and wages are key electoral issues.

Chile's open economy and its solid institutions are expected to remain broadly intact regardless of who governs until 2018.

A single mother of three and a victim of torture under Augusto Pinochet's dictatorship, Bachelet was one of conservative Chile's most unusual leaders since the return to democracy in 1990.

Critics said too much of her appeal was based on personality. Others in the wide-ranging leftist bloc blasted her for not pushing through bolder social reforms.

Bachelet's legacy was tainted by a slow response on providing aid and halting looting after a devastating 8.8-magnitude earthquake hit at the end of her term in February 2010.

She faced sharp criticism over the failure of the navy's catastrophe-alert system to warn of the ensuing tsunami, leaving hundreds who survived the quake to be engulfed by huge waves that followed.

(Writing by Alexandra Ulmer; Editing by Helen Popper and Stacey Joyce)

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New Jersey, its "comeback" derailed, sets another budget

(Reuters) - A year ago, New Jersey's firebrand Republican Governor Chris Christie called on lawmakers to cut the state's income tax rate as part of the "New Jersey Comeback," a campaign aimed at boosting economic growth.

But the Democrat-led legislature effectively killed his tax cut when revenues lagged forecasts. Then Superstorm Sandy slammed the state, its full fiscal impact still uncertain.

As Christie gets ready to propose another budget on Tuesday, New Jersey, the 11th most populous state, is still in need of a comeback. It has the fourth highest unemployment rate of any U.S. state, at 9.6 percent, nearly 2 percentage points above the national rate. It was one of three states to report late in 2012 that revenues were lagging expectations.

New Jersey also faces a host of fiscal unknowns. State lawmakers, pundits, investors and Wall Street credit rating agencies will be watching Christie's presentation for answers.

"We've really got to see some concrete progress being made on the books," said Richard Ciccarone, chief research officer at McDonnell Investment Management in Illinois. "There were a lot of promises made… that they are going in the right direction."

REVENUES AND OTHER UNCERTANTIES

Christie had predicted revenue growth of more than 7 percent for fiscal year 2013, which ends on June 30. But so far this fiscal year, revenue is up only 3.9 percent through January to just under $13.1 billion.

That's $350 million, or 2.6 percent, under what's been budgeted for this year. However, the state is expecting its usual uptick in personal income tax collections in the month of April.

"While revenues on a year-over-year basis are better than they were in 2012, they're still falling below budget," said Marcy Block, a senior director at Fitch Ratings.

Fitch rates New Jersey's general obligation debt AA-minus with a stable outlook. Moody's Investors Service rates New Jersey Aa3 with a stable outlook.

Standard & Poor's Ratings Service has an AA-minus rating and a negative outlook on the state, because of concerns over structural budgetary imbalances, growing fiscal pressures what it says are optimistic revenue assumptions.

"When they budget for revenues, they've got to be more conservative," Ciccarone said. "This is a consistent story, a pattern, no matter which way you dice the numbers." Christie is expected to present updated revenue forecasts on Tuesday.

He's also expected to reveal whether New Jersey will expand its Medicaid program under President Barack Obama's federal health care reform.

(For a graphic on Medicare expansion, click on http://link.reuters.com/teh26t)

Republican governors, including Christie, have criticized the law. But several have opted to expand anyway, including Florida's Republican Governor Rick Scott, who reversed course on Wednesday and said the state would expand Medicaid.

Not expanding Medicaid could cost New Jersey $4.2 billion over the next nine years, according to a report published on Thursday by the left-leaning think-tank New Jersey Policy Perspective.

If it opted to expand, however, New Jersey could save $2.5 billion, the group said.

SANDY AND THE SHORE

New Jersey's short-term fiscal picture is also clouded by efforts to recover and rebuild after Sandy, which ravaged the region as it made landfall on October 29.

It's still not clear whether Sandy-related expenditures exceed funds the state has received. Fitch analysts have asked the state to walk them through the numbers, but that has not yet happened yet, according to Block.

New Jersey Assembly Budget Chair Vincent Prieto, a Democrat, said legislators don't know exactly what portion of the $50.5 aid package is headed for New Jersey.

The assembly's budget committee voted on Wednesday to give itself subpoena power over Christie administration officials, including State Treasurer Andrew Sidamon-Eristoff, after he repeatedly declined to testify before the committee.

Christie said the subpoena vote was politically motivated.

Another question mark facing the state is whether the New Jersey shore, a major economic driver that was ravaged by Sandy, will be ready for tourists this summer season - and whether they'll come.

A Rutgers-Eagleton poll this month found that 63 percent of regular visitors to the shore planned to spend the same amount of time there this summer, with 13 percent saying their stays would be even longer than usual.

State Senate Republican Leader Thomas Kean Jr. said that the state is living within its means. Kean said he wouldn't be surprised if Christie again proposed a tax cut, but it wasn't certain, given the impact of Sandy.

"The New Jersey comeback is going to happen," Kean said.

(Reporting by Hilary Russ; Editing by Tiziana Barghini and David Gregorio)

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