Former Congressman Ed Case, state Senate President Colleen Hanabusa and Honolulu City Councilman Charles Djou, the three candidates in a special election for Congress, began to differentiate themselves for voters yesterday in the first public event of the campaign.

At an hourlong forum at a Smart Business Hawaii conference at the Ala Moana Hotel, the candidates discussed their views on the economy, taxes, health care reform, a Honolulu rail project, federal maritime law and a Native Hawaiian federal recognition bill.

With a special election to fill out the remaining months in U.S. Rep. Neil Abercrombie's term in urban Honolulu's 1st Congressional District coming as soon as May, the candidates are quickly trying to establish themes. Abercrombie is resigning in late February to focus on his Democratic primary campaign for governor.

The special election is winner-take-all, and the victor will likely be favored to win the September primary and November general election to replace Abercrombie in Congress.

Several key policy differences emerged yesterday.

Case and Hanabusa, both Democrats, said it would depend on the health of the economy before they would commit to supporting a second federal stimulus program, while Djou, a Republican, said he opposes a second stimulus because he said the first infusion of federal money has not led to job creation.

"This is not the right way to run our government. This is not the right way to fix our economy," Djou said. "Spending more money, and throwing money at a problem, never fixes anything. And certainly it's not going to get us out of this recession."

Case said he wondered what would have happened if not for the federal stimulus. "I don't think anybody has any doubt that things would have deteriorated pretty rapidly had we not had the stimulus," he said. "But does that mean that, next year, we continue the stimulus? I'm not so sure. I certainly don't believe we continue it at the same level as we did."

Hanabusa said the state's budget deficit would have been nearly $1 billion worse if not for the stimulus money, which was used by state lawmakers and Gov. Linda Lingle, a Republican, to help close the gap.

"The state budget would not even be near balanced, but for stimulus," she said, adding that it helped lawmakers avoid more painful options such a general-excise tax increase.

Case and Hanabusa also said they would judge new federal taxes based on the circumstances, while Djou said he would oppose new taxes.

HEALTH CARE

On health care reform, Hanabusa said she would have likely voted for the U.S. House version of the legislation, which included a government-run public option, even though she prefers a state health insurance exchange found in the U.S. Senate version of the bill.

Hanabusa also said she wants the reform bill to include an exemption for the state's Prepaid Health Care Act of 1974, which requires business to provide health insurance to employees who work 20 hours a week.

"I don't think there's anyone in this room who disagrees with the fact that health care reform must be done, it has to be done," she said.

Case said he prefers the U.S. Senate version of the bill but, like Hanabusa, believes reform is necessary.

Djou, who said he would not have voted for the U.S. House version, and Case said they want medical malpractice insurance reform, the ability of consumers to purchase health insurance across state lines, and expanded medical savings accounts.

Case and Djou both said they have concerns that a new version of a Native Hawaiian federal recognition bill would give Hawaiians inherent powers before negotiations with the state and federal governments. Hanabusa said the new language, which has been opposed by the Lingle administration, would treat Hawaiians the same as American Indians and Native Alaskans.

All three candidates are worried about the potential cost of a Honolulu mass-transit project, with Hanabusa also questioning the elevated steel-on-steel design of the project.

Case said he believes Honolulu needs some form of mass transit but said the city's process has not been transparent enough.

On maritime law, Case and Djou said they favor an exemption for Hawai'i from the Jones Act, a federal law that protects the nation's shipping industry from foreign competition. Case said the law has led to a duopoly in Hawai'i, where shipping is dominated by Matson Navigation Co. and Horizon Lines Inc.

"I've walked the walk on this. I have suffered a great deal of political punishment, going back to that theme, for the fact that I dare to ask this basic question, which is should two companies control all shipping between here and the Mainland essentially?"

Hanabusa, however, said the Jones Act has helped guarantee that the Islands have reliable links to goods and has sustained the domestic shipping industry.

The tone of the discussion — moderated by Malia Zimmerman of the conservative-to-libertarian Hawaii Reporter Web site — was friendly, but tension appears to be building between Case and Hanabusa.

SPECIAL ELECTION

Case was the most aggressive of the candidates, opening with a reference to the backing Hanabusa has received from U.S. Sen. Daniel K. Inouye, U.S. Sen. Daniel Akaka and several union and political leaders.

"As you know, there's a contract out on me," Case said. "I'm accused of independent thought and action."

Case also suggested that Hanabusa does not want the special election held in May — 60 days after the vacancy, the soonest possible under state law — because a delay may be to her political advantage. Case has higher name recognition with voters than Hanabusa, who would have more time to strengthen her campaign if the election were held later.

The state Office of Elections has said that the goal is to hold an all-mail special election on May 1, but, because of budget cuts, has not identified exactly how the election will be financed.

The state also has to acquire new voting machines because of legal challenges to the machines used in the 2008 elections.

"We need to have time for people to register to vote, for people to understand how the voting is going to be held, and then for them to get the ballots out," Hanabusa said.