American Recovery And Reinvestment Act Of 2009
BREAK IN TRANSCRIPT
Mr. NELSON of Florida. Madam President, I wish to talk about not just the stimulus bill but how we need to address this overall economic crisis, which the more we hear about, the worse it gets. If we don't watch out, we are going to be in a downward economic spiral.
Look back to where we got into the mess. Wall Street allowed banks to make too many bad home loans. They were home loans the homeowners could not afford, and many times they were rushed into signing these kinds of agreements when their income level would not support that kind of mortgage. Then Wall Street bundled thousands of those mortgages--sometimes you heard them referred to as subprime--and sold them as a security. Those were bought and sold throughout the financial process, from financial institution to financial institution. They were sold at a profit. There was little or no regulation. Of course, the bankers walked away with billions of dollars in bonuses and the taxpayers now have to clean up the mess.
Well, what began as trouble in the housing market quickly spread to the financial system and, from there, to the economy as a whole. The revenue stream for these mortgages was cut off because people weren't paying their monthly payments on the mortgages, and therefore the revenue from these bundled securities of bad mortgages weren't paying off, and that started rippling through the entire financial system for whoever held those bundled mortgages.
What started as an American problem now has become a global problem. Foreign governments, many of their investors, had invested in these bundled securitized mortgages. Foreign governments have seen their exports decline, and they are finding themselves shut out when they seek loans from the world's banks. The banks aren't lending because they do not have the security of knowledge that those borrowers are going to pay off. Lo and behold, since this thing has spread globally, even to foreign governments, some of the governments may even default on their own debts, which would be a devastating blow for any nation.
That is a story that has yet to be told. We may have foreign governments defaulting on their debts and going into insolvency. Such defaults could clearly pose a national security threat for us, as already fragile governments fall and are replaced by forces that are hostile to American interests.
At the same time, our current economic crisis will soon become a financing problem for our own Government. We are running up a large tab. We are spending nearly $900 billion in this bill to stimulate the economy. Maybe we are going to have to spend that much again to relieve the banks of the toxic assets--these bad assets that are so underwater--in order to get these toxic assets off the books of the banks.
Well, when you look down the road, it is hard to fathom that we are going to put this financial burden on our children, but economists--conservative and liberal--across the spectrum agree that the burden could be far worse if we don't take bold and immediate action, as evidenced in what is on the floor of the Senate now. We need to act, we need to act boldly, and we need to act now.
This economic recovery bill that we will consider this week begins to move us in the right direction. Now, there ought to be some tweaks and some iterations on it, and we are going to consider that in the amendatory process, but let's consider the thrust of it. It funds shovel-ready infrastructure--those projects that are ready to go--which are going to strengthen our Nation while creating jobs in the construction sector.
We heard the chairman of the Finance Committee say that over 90 percent of all the spending that occurs as a result of the tax cuts and the tax incentives--he said over 90 percent of all the tax portion of the bill is going to take effect in the first 19 months. Now that is the kind of stimulus we need.
This bill provides health and education assistance to State governments. It protects the most vulnerable, while putting money back into the economy. The legislation before us creates incentives for the private sector to put money into innovative ideas in health care technology, in energy efficiency, and in a smarter electricity grid.
I think this bill moves us in the right direction. But we have to watch out that we do not get sidetracked. We need to make sure we are investing in sectors where the economy is idle, where Americans stand ready to work on the projects we fund. As we debate the bill's tax provisions, we need to make sure they provide incentives for employers to create new well-paying jobs.
I saw something that is disturbing to me. I saw that a group of our Senators is trying to do some cuts in this, and in a publication this morning they singled out NASA, the National Aeronautics and Space Administration. The chairman of the Appropriations Committee has helped those of us who work in this kind of specialty here before the Senate. What this group of Senators does not realize is that is directly related to job stimulus because of the horrible situation we have ourselves in where we are going to shut down our American vehicle to get to space, the space shuttle, and it is going to be another 5 years, under the present plan, to get the new rocket ready to get to our own space station that we have built and paid for. As a result, the Kennedy Space Center, the Johnson Space Center in Texas, and the Marshall Space Center in Alabama are looking at massive layoffs. My space center in Florida is looking at 5,000 jobs being laid off. The chairman of the Appropriations Committee, who has an insight into this, has provided that money for stimulus for those jobs. So let's keep that goal in mind--jobs. That is what we want to do with this stimulus bill.
The legislation alone is not going to move us beyond the total problem we are facing, the potential downward spiral. Experts, liberal and conservative, now agree that the Nation's banks are going to need ongoing support at a cost that might exceed what we have committed already. If the banks are going to continue receiving Government support, they must grant taxpayers a meaningful ownership stake. They must boost lending to individuals and to small business, and they must accept real limits on executive compensation.
Of course, there is another story chronicled in this morning's newspapers about how all of these banks have gotten all of these billions of dollars, and that not only has not increased lending, their lending to borrowers has actually decreased. That is unacceptable.
If we provide the banks with more support--and I suspect we are going to have to--in this next tranche of $350 billion, then we still are going to have to address the mortgage foreclosure crisis, which is the root cause of the current circumstance. We need a credible plan for Government-backed mortgage refinancing, whether it is through Freddie or Fannie, the FDIC, or whether we create a new loan facility that is created specifically for that purpose. I talked to the Secretary of the Treasury three times about this, and I am encouraged that the administration appears to support such a plan.
I am telling you, every one of us knows that our constituents, particularly those near retirement age and retired, are dramatically concerned about the loss of their retirement savings which has accompanied the markets' collapse.
Since the 1980s, what happened? We have seen a shift away from a defined benefit pension, toward a market-based individual retirement account. Many Americans now rely on such accounts as a vital source of retirement income--the IRAs, the 401(k)s--and for those who have reached retirement--and every one of us has a lot of retirees in our State--or for those who hope to retire in the near future, the markets' collapse has delayed or laid waste to their plans, all the while Wall Street executives walk off with billions of dollars in bonuses. These are folks who have worked. They played by the rules. They have saved all of their lives. They deserve our attention more than the bankers who got us into this mess.
I want to quote from an Indiana newspaper, the Evansville Courier. To our colleagues from Indiana, I wish to compliment the editorial from your newspaper on February 2:
The middle class retirees who saved in their IRA and 401(k) plans, and who intended to use their Social Security entitlement to supplement their investment income, and thereby to live out their days in modest comfort, now face the complete loss of that dream. It was not a dream of luxury, just a hard-won freedom from daily work and maybe a trip to somewhere warm in the winter.
That is what they saved for. And once this economy recovers--and it will, hopefully sooner than many predict--we are still going to have a lot of work that will remain. We need to look at the current causes of our crisis, and we need to better regulate our financial markets. As the economy recovers, we will need to keep a close eye on the Nation's monetary policy. Interest rates now are at historic lows, and our monetary policy is looser than it has been in decades. As we step on the fiscal gas, in addition to the monetary loosening, we need to make sure we do not overshoot the mark and trigger a new period of inflation.
So our problems are many and our options are few. Things may get worse before they get better. If we put aside the differences and reason together, they will get better.
I yield the floor.
BREAK IN TRANSCRIPT