U.S. Senate candidates Rand Paul and Jack Conway are offering competing solutions to an age-old dilemma - how to lift more people into the middle class in a state saddled with historically high poverty rates.
Their differences revolve around the role of government, if any, to spur job growth and higher incomes.
Conway, a Democrat, supports a "hometown" tax credit to reward small and medium-sized businesses for job creation, and he calls for stepped up lending through the Small Business Administration. He talks of "smart oversight" from the government to protect consumers from "hucksters and risky gambles" by the financial sector.
Paul, his Republican opponent, sees government as a deterrent to growth.
"Government must get out of the way so American businesses and families can get back to work," the tea party-backed Paul said in response to a questionnaire from The Associated Press.
Conway talks of restoring "the golden years" of economic growth under President Bill Clinton.
AP asked Paul and Conway to provide written responses to how they would grow household incomes and strengthen the middle class in Kentucky, which lags behind most of the country in income and ranks among the poorest states.
According to U.S. Census Bureau figures, Kentucky ranked 48th with a median household income of $40,072 in 2009, trailing just three states in a survey of all 50 states and the District of Columbia.
In another 2009 Census survey, Kentucky ranked 47th in the percentage of its population ages 16 to 64 that's in the work force. Meanwhile, Kentucky had the third highest percentage of its population living below the poverty level.
Kentucky had 10 percent unemployment in August, putting it above the 9.6 percent national rate. A year earlier, the state's jobless rate was hovering close to 11 percent. Kentucky lost nearly 100,000 manufacturing jobs between 1999 and 2009, according to the state Office of Employment and Training.
University of Kentucky economics professor John Garen said Thursday that the state's economy remains weak. The recession seems to have "bottomed out" in Kentucky, he said, but "growth is pretty minimal." Kentucky tends to recover more slowly from downturns because its economy is more closely tied to manufacturing than many other states, he said.
Congress can significantly influence the national economy with tax and regulatory policies, as well as its work on the financial, health care and energy sectors, Garen said.
Paul blames President Barack Obama and Democratic congressional leaders for holding back the economic recovery by pushing policies that are "creating uncertainty and increasing costs on businesses and individuals."
Specifically, Paul wrote that he would work to repeal the health care overhaul as a way to cut costs to families and businesses. He said the new law will drive up health costs.
Conway supports the health care law but says it could be improved. He has said hundreds of thousands of Kentuckians will get health coverage for the first time thanks to the overhaul.
Paul also said in his response that the threat of federal regulation of greenhouse gas emissions is causing more uncertainty for businesses, especially in Kentucky's coal regions.
He said he favors extending tax cuts that passed when Republican George W. Bush was president. The reductions are due to expire at the end of the year unless Congress extends them.
Paul also said he will push to balance the federal budget "to stop the unsustainable debt that Washington is piling on future generations and end government takeovers and bailouts of businesses."
Conway wrote he has found $430 billion in savings by closing corporate tax loopholes that encourage companies to ship jobs overseas, allowing Medicare to negotiate lower prescription drug prices and cutting other waste.
He said his tax credit proposal will "encourage businesses to expand their payrolls and create jobs" - which he called the most immediate way to increase family incomes and boost the middle class.
To get more credit flowing to small businesses, Conway said he'll push for expanded lending from the Small Business Administration, along with reduced fees and increased guarantee levels.
