IN THE KNOW
On the House Floor
On Friday, the House passed H.R. 1424, the Emergency Economic Stabilization Act, which also included the provisions contained in the Tax Extenders and Alternative Minimum Tax Relief Act. This bill is the largest "bailout" in history, providing the Treasury Department with $700 billion in spending authority to purchase the troubled assets of Wall Street's major investment houses.
Why I Opposed the Bailout
The provisions of the final bill relating to the economic emergency are substantially improved from the first proposal considered by the House. But for the House having defeated the first bill last Monday, we would not have the modification of the punitive accounting rules ("mark-to-market") that have endangered the soundness of our financial institutions or the increase in the F.D.I.C. deposit insurance limits from $100,000 to $250,000. These changes will help stabilize our economy without any burden to the taxpayers whatsoever. Unfortunately, the final bill still has at its core the expenditure of $700 billion of taxpayer money to bail out the irresponsible businesses that made bad decisions in their lending practices. This bailout amounts to an indirect tax of $6,034 per American household, and it could potentially forever change the landscape of the nation's free-market system.
While I rejected the plan that took taxpayer dollars to bailout Wall Street, I understand the need for action to restore stability to our financial markets, which is why I supported two alternatives that would provide the tools to secure our economy while minimizing the risk for taxpayers. One proposal would inject private capital into the market by encouraging investment through changes in the tax code and would also reform the failed government institutions, Fannie Mae and Freddie Mac, largely responsible for our current financial instability. The other proposal would protect all creditors in banks during the period of instability and would allow the F.D.I.C. to work with banks to place meaningful values on their assets and capabilities. Inexplicably, Washington turned a deaf ear to these alternatives and continued to pursue spending the $700 billion, which will neither solve this crisis nor prevent the next one. Washington is addicted to fiscal policies that simply cannot be sustained if our nation is to remain the beacon of freedom, hope and opportunity to the world.
Rural Schools Secured
Despite my opposition to the bailout, I am very pleased to see that it was attached to a bill that contains relief from the Alternative Minimum Tax for over 25 million Americans, important tax credits for the development of solar and other alternative energy sources, and the reauthorization of the Secure Rural Schools and Community Self-Determination Act, which compensates our forest-dependant counties for their loss of lands at the time the National Forest System was created. For the past several years, reauthorization of this program has been one of my top priorities, as these funds are essential for rural counties to provide basic services such as schools and roads. Without these funds, several schools in the Fourth Congressional District would be forced to make drastic cuts that would ultimately harm our children. With the passage of this bill, rural counties will continue to receive funding through 2012, providing them with the security to budget for the upcoming fiscal years.
Quote of the Week
"Having financial institutions sell the loans to the government at inflated prices so the government can turn around and sell the loans to well-heeled investors at lower prices strikes me as a very good deal for everyone but U.S. taxpayers." - Former F.D.I.C. Chairman William Isaac, The Washington Post, September 27, 2008.