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Public Statements

The Financial Crisis, Tarp And Pay-Go

Floor Speech

Location: Washington, DC

* Mr. RYAN of Wisconsin. Madam Speaker, in September of 2008, credit markets seized up. Many did not understand the full ramifications of the financial crisis at the time that has since resulted in a deep recession with high unemployment. To respond to that crisis, Congress came together on a bipartisan basis and enacted the Emergency Economic Stabilization Act of 2008, EESA, that included the Troubled Asset Relief Program, TARP.

* During the debate on that bill, there was tremendous controversy over the $700 billion in authority the administration was seeking to help stabilize financial markets and to avoid a much more severe economic crisis. Treasury was ultimately granted this extraordinary authority, but Congress included many key taxpayer protections. Among those protections, we wanted to make sure that TARP did not become a piggy bank for Congress to use to fund other programs.

* The Senate has a budget procedure that is designed to keep funding designated as an emergency from being used as an offset in the future for budget enforcement purposes. The House does not have this procedure for mandatory spending bills, such as the TARP, or tax legislation. It was agreed to at that time that TARP funds could not be used as an offset for new programs or tax reductions for the purposes of budget enforcement. The EESA designated TARP as an emergency for the purposes of Senate enforcement. In the House, the budget is enforced through clause 10 of rule XXI of the Rules of the House of Representatives, the pay-as-you-go rule, and the Congressional Budget Act of 1974.

* In order to assure this, Section 204 of the TARP law includes the following language: ``rescissions of any amounts provided in this Act shall not be counted for purposes of budget enforcement.''

* This language can only mean one of two things: (1) It means legislation considered by the House of Representatives must find other offsets for new spending or tax reductions and may not use unexpended TARP resources to comply with budget-related points of order; or (2) It means nothing.

* The budget and the treatment of TARP and emergencies is a technical matter and it posed a challenge to draft this language under the extraordinary circumstances and pressures involved in the drafting of the EESA. However, the clear intent of the counsels involved in the drafting of the specific legislative language was that TARP should not be used to fund new programs, the expansion of existing programs, or for tax reductions.

* The Wall Street Reform and Consumer Protection Act of 2009, H.R. 4173, includes language effectively cancelling $10.2 billion in TARP funds in order to offset the effects of increased spending, and only by virtue of the TARP funds, is considered to abide by the pay-as-you-go point of order.

* Using TARP to offset new programs is clearly inconsistent with the agreement on the TARP and the EESA when it was enacted on a bipartisan basis in 2008 and I believe it is inconsistent with a plain reading of the law.

* This was an instance when we were working together and it is unfortunate that the law and the rules are now being interpreted to allow the TARP to become a piggy bank to increase spending, deficits, and debt.

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