Loophole

WASHINGTON - Republicans showed new signs of flexibility to break a budget impasse Wednesday, but the White House raised the ante - pushing for more deficit reduction and taking a pugnacious tone casting the GOP as defenders of corporate tax giveaways. The repositioning by both sides appeared to open new compromise possibilities a day before President Obama was set to host the bipartisan congressional leadership for new talks on the budget. The secret negotiations were gaining new urgency because they are tied to an Aug. 2 deadline to raise the government's borrowing authority.

WASHINGTON - Even as the political battle rages over federal spending, the end result for federal policy already is visible - and clearly favors Republican goals of deep spending cuts and drastically reduced government services. President Obama entered the fray last week to insist that federal deficits cannot be reduced through spending cuts alone. Tax revenues also must rise as part of whatever deficit-reduction package Congress approves this summer, he said. Obama has been pushing to end a series of what he calls tax loopholes and tax breaks for the rich.

City Councilman Bill Green, a high-profile beneficiary of a loophole in the city's 2005 campaign-finance law, objected yesterday to a new regulation that would allow the city's Board of Ethics to crack down on the practice. Council voted unanimously in April to close a loophole that allowed political-action committees to exceed the $10,600 contribution limit for candidates in each election cycle. A PAC that contributes to a candidate could give money to another PAC, which could then contribute to the same candidate.

Philadelphia's resourceful public officials - the same people who gave us DROP - have devised new ways to loot the city's already-depleted pension fund. DROP, the subject of City Council hearings scheduled for today, is the great municipal giveaway that allows retiring city employees to collect their salaries and pensions for up to four final years on the job, with the pension money paid out in the form of lump-sum bonuses when they retire. Since 1999, when Council unanimously adopted DROP (which stands for Deferred Retirement Option Plan)

THE DEFERRED Retirement Option Plan has more lives than an alley cat and more twists than a Tom Clancy novel. It's all trapdoors and mirrored halls: When DROP was drafted more than a decade ago, elected officials were not included. When it was passed, they were included. Do you believe in magic? Everyone signing up for DROP makes an "irrevocable commitment" to retire after receiving the lump-sum payout (aka pot o' gold). Abracadabra! Some elected officials grabbed the pot o' gold and returned to their jobs.

The electricians' union continues to leave the biggest footprints in city political races, reporting donations of at least $10,000 to five different City Council candidates and steering even more to a favored few. Campaign finance reports filed Friday with city election officials showed Local 98 of the International Brotherhood of Electrical Workers took advantage of a loophole in the city's contribution limits to send at least $55,000 in support...

Acting swiftly to plug a loophole in Philadelphia's campaign-finance law before the May 17 primary, Mayor Nutter and City Council sent the right message about the city's resolve to keep pressing for reform. The flaw in the 2006 law was repaired by an ordinance approved by Council on Thursday and immediately signed by the mayor. Before Council members and Nutter acted, political action committees - and, notably, one run by the city's most politically active union - were able to make a legal end run around limits on campaign contributions.

IT SURPRISED US to learn that the word "loophole" dates back to the 16th century, describing a small hole in the wall through which an arrow or gun might be fired. We were sure it was going to have its origins as an electrical term, since the electricians union is particularly adept at finding them. The city's attempt to reform campaign finance rules in 2006 managed to impose a $10,600 contribution limit to candidates from a single Political Action Committee, but neglected to cover contributions from multiple PACs in the same organization.