When Sen. Kay Hagan’s family submitted a proposal for a federal stimulus grant in 2010, they said there was no reason to think it might be controversial.
They were wrong.
The stimulus grant has become a late-breaking controversy in the close North Carolina Senate race, potentially damaging the Democratic incumbent’s re-election chances.
It started when Hagan’s husband, Chip, and brother-in-law, John Hagan, partners in the firm JDC Manufacturing, LLC, applied for a grant from the federal stimulus bill that the senator had voted for.
In August 2010, a representative of the company filled out an application for an energy efficiency grant which asked if there were “any issues that would generate public controversy regarding the proposed action.”
John Hagan, who signed the application and ostensibly filled it out, checked the box next to the word “none.”
The Hagans consulted an ethics lawyer to ensure that receipt of the grant would be above board. Given the green light, they saw no reason to avoid applying for, and ultimately accepting, a grant of more than $250,000 to upgrade lighting and heaters in JDC’s Reidsville, N.C., factory.
Furthermore, the North Carolina government department responsible for awarding the grants did so on a blind basis. Describing the possible “public controversy” could have compromised the process.
“Kay’s only involvement was to seek the opinion of an ethics attorney who found that it would be appropriate for her husband’s company to receive the grant, just like hundreds of other North Carolina companies did,” Hagan campaign spokeswoman Sadie Weiner told the Washington Examiner.
The final cost for the project came in at $503,477. About $253,000 of that total was covered by JDC.
Republicans charge that Hagan and her family profited from her support of the $800 billion stimulus, formally the American Recovery and Reinvestment Act of 2009.
The family connections don’t end with the company’s ownership. Hagan’s son, Tilden, was an employee of Circuit Makers, a company paid to handle some of the work on the project, an he personally performed some of the labor related to it. Hagan’s future son-in-law, William Stewart III, was a paid vendor on the job, according to copies of invoices he submitted. Republicans contend the Hagan family should at least have known that the grant might arouse controversy and been more forthcoming on the application.
GOP operatives point to conflict-of-interest rules of the stimulus grant program that suggests there might be a problem with JDC hiring other Hagan family members to perform work.
“These rules require, among other things, that no one with direct lineal relations may receive incentive payment. For example, the mother, father, brother, sister, son or daughter of a contractor working in this Program cannot receive awards, contracts and subcontracts,” the application read in part.
“Sen. Hagan lied when she said she didn’t benefit from her vote for the stimulus, and her campaign has lied to cover her tracks. North Carolinians deserve to know the whole truth about her stimulus payday,” said Will Allison, spokesman for the North Carolina Republican Party.
Democrats describe the charge as a “desperate” attempt by Republican state House Speaker Thom Tillis to rescue his campaign. Democrats also claim that the story has been driven by the Carolina Journal, the media organ of the conservative, Raleigh, N.C., John Locke Foundation think tank.
Mainstream North Carolina media outlets have covered the matter extensively, however. The contest remains close. Tillis has gained but Hagan still led Tillis on Wednesday in the RealClearPolitics average by two percentage points.
The issue of whether wealthy candidates for public office have unfairly profited or gamed the system has become a perennial point of attack. And, at a time when Americans still hold pessimistic views of the economy, it has proven effective from time to time. In the Georgia Senate race, for instance, Democratic nominee Michelle Nunn has focused on almost exclusively on Republican David Perdue’s business background. The strategy has been successful.
So it’s not surprising that Tillis would dissect the Hagans’ businesses and work to connect them to the senator’s voting record. According to Roll Call, Hagan is the 41st wealthiest member of Congress, with a net worth of just over $9 million.
Democrats emphasize that the information about JDC’s receipt of the stimulus grant was known for years, and no one ever bothered to highlight it or suggest that there was an unethical conflict of interest. It’s only an issue now because partisans are seeking a political advantage in a very competitive Senate race that will be decided less than two weeks from now and could determine the balance of power in Washington.
Caitlin Legacki, a spokeswoman for JDC, said the company did nothing wrong and emphasized that Sen. Hagan had no involvement in the firm’s application and receipt of the grant.
“Each phase of the project was closely monitored as and evaluated with a critical eye from inspectors and auditors to ensure taxpayer funds were spent appropriately and for their intended purpose,” she said. “Hundreds of companies received these grants and Kay Hagan had no role during any of this process. Under no circumstances did JDC profit from these grants and any assertion otherwise is false.”
Legacki used to work as a Democratic political operative, serving stints as a spokeswoman for sitting Democratic Sens:Claire McCaskill of Missouri; Jeanne Shaheen of New Hampshire — and North Carolina’s Hagan.
