Increasing The Statutory Limit On The Public Debt

Floor Speech

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Mrs. HUTCHISON. Madam President, I rise today to speak in support of the Thune amendment, which I cosponsored. It would put the brakes on the TARP train wreck.

TARP was originally conceived to purchase toxic assets from banks in order to clean up their balance sheets and provide them the capability and liquidity to begin lending again. At the time, Federal Reserve Chairman Ben Bernanke said that we were facing the most severe financial crisis in the post-World War II era. President Bush stated that the unprecedented challenges of such a financial crisis required unprecedented response and, without action, the American people would face massive job losses, significant erosion in the value of retirement accounts and home values, and a lack of credit availability. Treasury Secretary Hank Paulson said that unless Congress took action, the financial system of our Nation and the world would collapse in short order.

My constituents said at the time that they could not get loans to keep their businesses up and running. Something needed to be done. Secretary Paulson proposed an emergency plan to authorize as much as $700 billion to purchase toxic assets, such as devalued mortgage securities, from the financial institutions holding them. It was stated that the plan would restore consumer confidence in the economy as the Treasury would show faith in our financial system by purchasing these assets and managing them while the market stabilized, and selling them later. The proceeds from the sale of these assets would then go to pay down our national debt.

In response, Congress proposed the Emergency Economic Stabilization Act, which created the Troubled Asset Relief Program, called TARP, and authorized $350 billion not $700 billion in Federal assistance.

The Republican and Democratic Governors Associations wrote jointly to ask Congress to act immediately on the legislation to provide economic security to the financial system and stabilize the crisis. Congress did act in overwhelming majorities.

Almost immediately, however, the Treasury Department deviated from the intent of the program and design they told Congress they would pursue. It did not purchase toxic assets as planned. Instead, the Treasury used TARP funds to take equity stakes in over 300 of our Nation's financial institutions. The program was further expanded to nonfinancial companies, pouring billions of dollars into AIG, GM, and Chrysler. When the administration asked for the second tranche of $350 billion, I said no, and so did many of my colleagues.

We have especially seen the misuse of TARP in capital repayments to the Treasury. Since the program began, the Treasury has received over $165 billion in paybacks, with interest. Under the Stabilization Act, proceeds from these paybacks were meant to be used to pay down our national debt. That was a key condition to its approval.

In a hearing last November, before the Banking Committee, of which I am a member, I spoke with the Assistant Secretary of the Treasury, Herb Allison, regarding the State of the TARP program 1 year later. Secretary Allison told us that these repaid funds ``go directly into the general account of the U.S. Treasury to reduce the Treasury's funding need''--to reduce our debt. Yet, when I asked him to confirm that the money repaid was no longer part of the total authorization of $700 billion, Secretary Allison said that when TARP funds are repaid, headroom is created within the program to provide additional commitments to maintain the $700 billion funding level. Thus, as the Treasury puts repaid funds back into one pot, it reaches into another for more--basically recycling the $700 billion. This is not what was promised. It is not what was passed. It is not what was envisioned. I most certainly never voted to authorize a revolving fund to remain in our economy indefinitely. I didn't even vote for $350 billion of this $700 billion that is now becoming a revolving fund.

According to the most recent TARP report from the Office of Financial Stability, approximately $545 billion in TARP funds has been committed. Repayments through TARP were over $165 billion. This leaves roughly, with the amount of the $545 billion which has been committed, about $374 billion being paid out with roughly $319 billion of unobligated TARP funds, or TARP authority.

The recent report issued by the Congressional Oversight Panel for TARP stated that although TARP authority ends October 3, 2010, any funds committed by that date but not yet spent can still be spent under TARP past this deadline. This could create an indefinite time period for expenditures through TARP.

The amendment offered by Senator Thune, me, and many others would allow us to truly put an end to TARP expansions, and it would put an end to it immediately. It would show taxpayers that Congress finally gets it, and that we are serious about reducing our Nation's skyrocketing debt. This would indeed be the first step in putting our financial house in order.

Today, we can begin the process of lowering this huge debt that our country, which just in the last year, has increased exponentially. We are looking at a bill that would increase our debt to $14 trillion. If we pass the amendment before us today, we can cut that back instead of adding to the debt. That is what we ought to do.

While we are at it, we need to stop the spending binge we are on. We need to stop the stimulus package, whatever is not authorized, because that, too, will add to our debt. We need to recommit to cut taxes. We need to say our financial house must get in order. It is time to reauthorize the tax cuts that were put into place that caused our financial stability after 9/11. It is the tax cuts that caused our financial stability. It is lowering the capital gains rate, lowering the dividends rate of taxation. This is what would open our markets and open our ability for businesses to hire people. It would restore consumer confidence. What about the death tax that will come back in full force next year? People don't know how to plan their giving to their children or giving to their employees and their businesses because they don't know what Congress is going to do. If there is anything Congress ought to do, it is stabilize our tax system and make the tax cuts permanent. We need to lower the capital gains and dividends rate permanently. These are funds that have already been taxed. They were taxed when they were earned. They should not be taxed for savings--dividends and capital gains are savings. That is how people plan for their future.

We need to recommit today to reorder our financial priorities. We need to get our financial house in order. That means cutting down on the debt, not adding to it. It means cutting spending, and it means making our tax cuts permanent. Capital gains and dividends rates should be lowered permanently so that our stock market would be permanently stabilized. And we should lower the rate for everyone because the people who can hire others will be paying at the highest rates when the rates go up. That includes schedule C corporations. We need to lower capital gains rates. We need to lower the burden on businesses. We need to lower the burden on families. We need to help people, not hurt people, who are trying to plan for their financial retirement.

Today, we have a chance to take the first step by saying that TARP is going to end, that we are not going to expand something that was authorized for an emergency purpose. This emergency purpose should be a commitment of Congress. We should not allow the expansion of TARP. We can take the first step by voting for the Thune amendment of which I am a cosponsor. We need to start the process today, and we can say to the American people that Congress is finally listening.

Many on my side of the aisle have been making these points day after day. We were here almost every day in December, Saturdays and Sundays included, trying to make the point that people don't want a government takeover of their health care system. Now I think we have a clear message from the people of Massachusetts that they don't like this either. The exit polling showed that 48 percent of them voted to keep this health care bill from going forward. The rest of them voted to say: Stop all of this takeover by government of so much of our lives--whether it is the cap and trade that will raise energy and fuel costs or whether it is letting the tax cuts lapse, which would give us more money for our own families to spend as we wish, not as government wishes; it is to stop the growth of big government; it is to stop the ending of the death tax for all intents and purposes so that we can pass on to our children the fruits of our labor.

Most of all, we have a chance today to say we are not going to raise the cap on our debt limit and we are not going to $14 trillion, which is now above 17 percent of our gross domestic product. It is our debt burden. This is not healthy.

The people of Massachusetts said: Get your house in order, Congress; get your house in order, Mr. President.

Let's do it. We can take the step today to do it. It is time for Congress to hear the American people and act, to hear their cry that we must get our house in order for the future of every American and every American's child and every American's grandchild. That is what we owe them. I hope we will take the first step with the Thune amendment and then the rejection of
the resolution to raise the debt ceiling. Then we can lower taxes permanently, and then we can take to the American people a new agenda that will really create jobs because the jobs will be in the private sector, not the government sector.

Madam President, I yield the floor.

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