[Congressional Record Volume 155, Number 22 (Wednesday, February 4, 2009)]
[House]
[Pages H1017-H1024]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMERICA'S FINANCIAL CRISIS
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 6, 2009, the gentleman from Missouri (Mr. Akin) is recognized
for 60 minutes as the designee of the minority leader.
Mr. AKIN. Mr. Chairman, it is a pleasure to be able to join with some
of my colleagues here tonight. And we're going to be talking about a
subject that is, I believe, near and dear to many people's hearts, or
at least of concern to many people. And I suppose one way to introduce
this subject would be to take a look at something that has been in the
news now for 6 and 7 years, and that would be the subject of how much
money we have spent in the war in Iraq.
Many people were observing that we were spending way too much money,
that the budget was out of balance and we are just wasting money over
in Iraq and in Afghanistan. And yet ironically, in the very first month
of this new administration and this new Congress, we spent more money
in that first month than what we spent in 2 years in the two different
wars for 6 and 7 years added together. If you add all of the money
spent in Iraq, all of the money spent in Afghanistan and add it all
together, it is less than what we spent in the first couple of months
of Congress this year.
Now, how do we get to that point? What brought this about? If you
want to try to take a look at how much money does that mean, that says
that we spent in the first month more money than the entire tax revenue
that we're planning to collect for the year 2008. It would be as if you
had your own family budget, and in January you spent all of your income
for the year. You have got 11 very lean months to take a look at.
So how is it that we got to this point? That is what we are going to
be talking about. We're going to have a nice kind of roundtable
discussion with many people from different States. And so I want to
back up just a little bit and take a look at how did we get to this
point that we have the economy in the condition that it's in?
Well, the story goes back quite a ways. It goes back to the Carter
years. People found that as people were trying to get mortgages,
particularly in certain areas of economically disadvantaged areas in
various cities, that it was hard for them to get home loans. And so
they put together the Community Reinvestment Act. And in a sense, what
it was saying to banks is, you have got to take a few of your loans and
loan them to people who it's not clear that they will be able to pay it
back, because somehow or another people everywhere need to have a
chance to buy a home and to own a home.
Well, that idea was then followed up with the creation of a couple of
quasi-governmental but also quasi-private organizations that were
little known at the time called Freddie Mac and Fannie Mae. And those
organizations were in the same business of trying to help people that
were sort of middle-income buyers or lower-income buyers to be able to
buy a house. And so they helped to write loans and underwrite loans.
The theory was, at least implicit, that the government IOU was behind
the things that Freddie and Fannie took care of.
Then as we moved along further, we moved up to the Clinton era.
Toward the end of Clinton's days, what he did was increased the
percentage of the loans that Freddie and Fannie had to make and
increased the percentage of them that were very risky loans. In other
words, essentially what he was saying was that the government is
forcing Freddie and Fannie to make loans and that we know an awful lot
of them are not going to be paid. And of course when you start to
mandate that quasi-governmental groups are going to make bad loans,
then pretty soon you're going to have trouble.
Well, this coincided then, as we move along a couple further years,
to the era when Alan Greenspan drops the interest rates extremely low
because the economy is tanking. In 2000, Greenspan started dropping the
interest rates. And then you create this idea of, well, hey, if we have
got all of this money at tremendously low interest rates, where are you
going to park it? Well, let's park it in real estate because real
estate always goes up. You can't make a mistake in real estate.
[[Page H1018]]
In my first early days here at Congress, boy, did I feel stupid that
I hadn't bought a great big multimillion-dollar house, because if I
could have just afforded the interest payments on it for 4 years, it
would have doubled in value between 2000 and 2004 or 2005. Of course, I
would have to have been smart enough to buy it in 2000 and smart enough
to sell it by 2005.
Well, as everybody knows, that old bubble popped. And increasingly
all of these loans that were being made started in the process of
defaulting. And it was not just people in economically disadvantaged
areas that were making these loans. No. Wall Street got into the deal.
And so did the speculators. And so what started to happen was you had
people going out there and selling all of these loans. The local banks
went through the Community Reinvestment Act and would make the loans.
But as soon as they made the loan, they turned it right on over to
Fannie and Freddie, assuming that if anything goes wrong, the Federal
Government is going to bail them out.
Then you get to the point where people are running around who are
mortgage brokers. And they don't care what kind of job you have. If you
want to borrow a half a million bucks, fine, because they simply write
the loan, make the commission on the loan, and the loan is passed on
largely to Freddie and Fannie.
In the meantime, Wall Street was taking all of these loans, packaging
them together and slicing and dicing them and selling them all over the
world and making a great deal of money in the process as the housing
bubble was going up and up. Everything looked pretty good.
And then you had the rating agencies, such as Standard & Poor's or
the other one would be Moody's. They were all giving these things
Triple A ratings. This is good stuff. Everybody around the world, buy
all of these loans that are made to people who we know really don't
have the ability to pay these loans.
And so now you get this situation where you're spiraling upward and
upward. The bubble is about to pop. Did anybody see it coming? Well,
the answer is, yes, as a matter of fact they did. President Bush saw it
coming. He saw it coming in 2003. And he approached the legislature. He
said, I have got to have the legislative authority to rein Freddie and
Fannie in because these guys are going crazy making these loans, and
it's going to mess the whole economy up.
And so Congress, while we were in the majority in 2004, we passed a
bill that allowed the President to have the authority to regulate
Freddie and Fannie to stop this runaway train. It went to the Senate,
and it was killed by the Democrats.
Now let's take a look at what appeared in the New York Times, not
exactly a right-wing oracle, about that very time, September 11, 2003.
And this is part of the quote, September 11, 2003, New York Times,
``These two entities, Fannie Mae and Freddie Mac, are not facing any
kind of financial crisis.'' Who would say that? Representative Barney
Frank of Massachusetts, the ranking Democrat on the Financial Services
Committee. ``The more people exaggerate these problems, the more
pressure there is on these companies, the less we will see in terms of
affordable housing.''
Mr. BROUN of Georgia. Would the gentleman yield?
Mr. AKIN. I would yield to the gentleman from Georgia who is quite an
authority on this subject. Thank you for joining us tonight, gentleman.
Mr. BROUN of Georgia. Mr. Akin, I just appreciate your yielding time.
I would like to clarify something you said here just for my own
personal edification and I hope the edification of the people who are
watching tonight. You said just a few moments ago that the President of
the United States asked for more regulatory authority over Freddie and
Fannie. Is that correct?
Mr. AKIN. That's correct. That was 2003 in the New York Times,
September 11, the President sees this coming, he says that we've got to
regulate them more.
I'm reclaiming my time. People are saying that this is a failure of
free enterprise. This has nothing to do with the failure of free
enterprise. This is a failure of socialism.
Mr. BROUN of Georgia. That is what I wanted to clarify, if you don't
mind yielding back a second. But the thing is, the President of the
United States, President Bush, who I have not always been in agreement
with on many things, but he was asking to regulate these GSEs,
government-sponsored enterprises, Freddie Mac and Fannie Mae. And it
was actually Freddie and Fannie, along with the Community Reinvestment
Act, plus the low interest rates that were out there so that these
subprime loans could be made. This is what created our housing bubble
that just rose so quickly and then burst so rapidly that the housing
prices went down. If I remember correctly, the Republicans in the
House, we also, in fact, passed a bill. Is that not correct?
Mr. AKIN. That's correct. We passed a bill. Reclaiming my time, we
did pass a bill. And this is something that we saw as a problem. But as
you will recall, the way that the Senate body works, while we sent
legislation over to them, this article goes on to say the Democrats
opposed it. And we did have the 60 votes to get it passed. So nothing
was done. And perhaps if there is any blame that needs to be made on
the economy being in the condition it's in, it really rests with the
U.S. Congress, with the House and the Senate.
Now these other rating agencies that said that you're going to give a
Triple A rating to this trash, certainly they ought to have to be
accountable as well. And certainly Wall Street was knowing that they
were selling trash and rating it Triple A and selling it all over the
world. It wasn't that they hadn't done some things wrong, but to allow
that to happen, first of all, the Congress was out to lunch.
Mr. BROUN of Georgia. But it was not the free enterprise system. It
was not deregulation. It was not anything except for the Democrats here
in Congress that blocked regulation. And it was, actually, there were
programs that were established by Congress. If I remember correctly,
the Carter administration passed the Community Reinvestment Act
initially. And under the Clinton administration it was markedly
expanded to force banks to make these loans where people couldn't pay.
Is that not correct?
Mr. AKIN. Reclaiming my time, my understanding was what Clinton did
was not so much in the Community Reinvestment Act, although that was
done with ACORN and all, but more particularly he specifically required
that Fannie and Freddie make loans that essentially we knew weren't
going to be any good. I yield.
Mr. BROUN of Georgia. I appreciate that. So, the Community
Reinvestment Act, and that is where I was going, and I appreciate your
mentioning that, and ACORN became a bunch of thugs using extortion.
That is what I hear from my bankers at home in Georgia, that ACORN
folks would come in and threaten them because they couldn't expand
their services and they couldn't put in ATM machines unless they would
make these bad loans. And that is what created this whole financial
debacle. And the blame, though, lies right at the feet of the people
who are pushing this stimulus package saying it was free enterprise.
Mr. ACKERMAN. Reclaiming my time, gentlemen. I think you struck
something that strikes me as being a tremendous irony. The people who
created the problem now are charged with fixing it. And that leaves us
in kind of an interesting--and I think that the reason that I wanted to
take a little bit of time with you, gentlemen, and knowing that you
know this subject, the reason I want to take time on it is because
sometimes people want to say, oh, we don't want to go witch-hunting or
go looking at who we are going to blame. But on the other hand, if we
don't understand how we got into the problem, we will end up doing the
same dumb thing over again. And that is my concern.
Mr. BROUN of Georgia. Absolutely. If the gentleman will yield, I'm a
physician, as the gentleman knows. And in medical practice we look at
problems and we try to find solutions to those problems. In fact, it is
quite different from what lawyers do. Lawyers generally just argue
problems. We try to fix problems. We try to find solutions to those
problems. And so we look at all the symptoms. We look at the causative
factors that come to bear in any disease entity.
[[Page H1019]]
Now we've got a horrible disease problem of a poor economy. The
American people are hurting, hurting terribly. And we're right now in a
debate about a bill that the House passed last week, the Senate is
taking it up now. But there is in my opinion a tremendous amount of
blindness by our colleagues, particularly on the other side, about what
are the causation factors of the housing burst that has really created
this economic problem that we have in this Nation.
{time} 1745
And I commend the gentleman for bringing this up because that
statement that the New York Times put in place, I think, is very
indicative of what's going on now. And I heard the same people who were
arguing back in 2003 and earlier against regulating Fannie and Freddie,
those same people, when we were talking about the TARP funds, the Wall
Street bailout, kept making a case that we need to make more of these
loans in the name of affordable housing, make those loans to people who
cannot afford to pay them.
Mr. AKIN. Reclaiming my time, you know, gentlemen, somehow or other
people want to try and package this as compassionate. I'm trying to
think of people such as myself or other people in my district and what
happens if you put someone into a house, and maybe they can afford a
$250,000 house, and you put them in a $400,000 house, and all of a
sudden, every month they've got that mortgage payment coming due; and
the financial pressure, it starts to drive the husband and wife apart
and make the children's lives hell as eventually they end up on a
street side with their sofa on the sidewalk because they can't afford
it. How is that compassionate? I don't understand.
But gentleman, I note that we have some other distinguished guests
here. Could we come back to you in just a minute?
Mr. BROUN of Georgia. Well, I have to leave in a second.
Mr. AKIN. I will yield.
Mr. BROUN of Georgia. I'd like to tell you and the American public a
story if you yield just another minute or two.
Mr. AKIN. I yield.
Mr. BROUN of Georgia. Okay. Thank you. I've got a friend who's in the
timber land business. He buys and sells timber land. And he was telling
me a story during this whole period of time when real estate prices
were going up. He had a piece of property in my district on the market
for $1.3 million. A gentleman came in and said, I want to buy your
land. My buddy said fine. Here's the contract. The buyer signed it.
Went to closing.
My good friend, when he got to closing, of course, got his check for
the $1.3 million. But he found out because of the problems with the
banking industry making these sub prime low doc, no doc, low
documentation, no documentation loans, that the buyer actually borrowed
$1.7 million for a $1.3 million piece of property. So he put $400,000
cash money in his pocket.
Now, if the property went up to $2 million or 2.1 or $2 million then
the bank would be happy. Both the buyer, and the seller in this deal
would have been happy, and everybody would have been fine.
But my friend found out that the buyer had no job. He had no assets.
He had no way to pay for this loan for $1.7 million.
Mr. AKIN. So reclaiming my time, you're just giving an example of
this absolutely crazy runaway policy that we have. It's basically a
free money, you don't have any job, you don't have any money, borrow
whatever you want and speculate and hope things work out right.
Mr. BROUN of Georgia. Well, that's the point I was trying to make if
the gentleman would yield.
Mr. AKIN. I yield.
Mr. BROUN of Georgia. That's exactly the point I'm trying to make is
that this whole banking industry debacle was crazy and it was set up by
policy that Congress established, and Republicans tried to do something
about it because we, as the Republican Party, people here in the House,
members of the Banking Committee in the Senate, Financial Services over
here on the House side, realized that this was a disaster in the making
and they tried to do something about it. And every effort that we did
was blocked by the Democrats, who, right now, today want to force down
the throat of the American people this stimulus bill that, in reality,
is nothing, nothing but a steam roller of socialism that's being shoved
down the throat of the American public and it's going to strangle to
death the American economy, as well as the American people.
Mr. AKIN. Reclaiming my time, gentleman, we are going to get to that
very point that you're making, and I thank you so much, Congressman
Broun from Georgia. And I sometimes think of it as doctor, but now
you're congressman. You've got a couple of different hats. I appreciate
your just straightforward approach. This is what we're talking about
that's hurting a whole lot of very small, very average people. And the
thing that really makes me sick about it is we saw the thing coming,
and not only has the American economy got a cold, we've given pneumonia
to the rest of the world, and there are people starving because of
these very policies.
And somehow, putting somebody in a house that they can't afford, I
don't see how there's anything compassionate about that.
But we are joined by another doctor from the great State of Georgia
as well, Dr. Gingrey, but maybe we should call him Congressman Gingrey.
I would be happy to yield to you sir.
Mr. GINGREY of Georgia. And I thank the gentleman from Missouri for
yielding. And I thank my colleague from Georgia, Dr. Broun, for his
timely and insightful comments.
It's good to join with you this hour, Mr. Speaker, to try to shed
some light on this issue, a terribly important issue to the American
people when we're in these rather dire economic circumstances. But the
big problem, of course Representative Akin and Representative Broun,
Mr. Speaker, spent time explaining how we got into this mess. And I
think it's very important that they did this and kind of set the stage
for where we are today, why we're here, how we got there, what the
problem is and basically, who's to blame. And certainly, if you do the
math, connect the dots, it's pretty clear. I won't go back through that
important information.
But we're now trying to decide, Mr. Speaker, what to do about it, how
to get out of this recession that we're in. And unfortunately, what the
Democratic majority and what President Obama has recommended, I just
don't think passes the smell test. I really feel that the likelihood of
this being successful, when you look, Mr. Speaker, at the spending in
this bill, this economic stimulus bill as it's called, where's the
beef? I mean, the old expression--I don't see where there's anything or
hardly anything in $825 billion that's going to do a whole lot of
stimulating.
Mr. AKIN. Reclaiming my time just a minute. What you're doing is
you're fast forwarding a little bit. We started by talking about how
did we get in this mess. I was going to make just a comment. Sometimes
people say this is as bad as the Great Depression. Certainly it's not.
It's not as bad as what things were under Jimmy Carter when we had
double digit unemployment and double digit inflation. But we can make
it that bad if we work at it and do the wrong things. So that's scaling
it.
Now, what you're talking about is we've got a solution that's being
proposed. It's a solution that's proposed by the Pelosi Democrat
Congress. We saw the vote on that last week. Not a single Republican
voted for it. But they had a proposal, and I think it's great that we
do have a problem. We acknowledge there's a problem, and they made a
proposal. And that's what you're talking about, Doctor, and you're
talking about the mechanics of what they're proposing, and I think we
need to take a look at that. And what you're saying, from what I'm
hearing you say is, you don't think it's going to work. And I yield.
Mr. GINGREY of Georgia. Well, if the gentleman will yield to me again
and I appreciate it. He said it exactly right. It is the Pelosi
proposal, the Democratic majority proposal, the Harry Reid proposal.
But it's certainly not the Congressional proposal, because we
Republicans, Mr. Speaker, are part of that mix. And as the gentleman
from Missouri points out, we were never consulted. There was no
essentially no markup, no regular order.
[[Page H1020]]
And as Representative Akin says, the importance of getting it right--
you know, some people use the expression for goodness sake, don't just
sit there, do something. Well, I happen to be a doctor too, an OB/GYN
doctor, and I know a lot of times it's better to not just do something,
sit there. The baby will come.
But we're not recommending though that we do nothing, Mr. Speaker.
We're just saying that when you've got a bill with 825, more in the
Senate, billions of dollars in it, it needs to stimulate the economy
for sure. And it needs to put people back to work for sure, not just
maybe.
And as the gentleman from Missouri said, we could make matters far
worse than they were in the late 70s under President Jimmy Carter, and
we could even get as bad as it was back in 1929, 30, 31, 32, so we want
to get it right.
And if the gentleman will bear with me just for a minute, I would
appreciate it. I wanted to show a poster or two to just to kind of put
the spending, the so-called stimulus, in perspective. And if my
colleagues will look at this first poster, and the question at the top
says, can you afford to pay for the Democratic spending bill? And
basically, at $825 billion, the economic stimulus plan that's sailing
through Congress would cost each American family more than $10,000 on
average. More than $10,000. In fact $10,500.
Mr. AKIN. Reclaiming my time, you're saying this is $10,000 for every
family in America is what this thing is going to cost?
Mr. GINGREY of Georgia. Exactly. If the gentleman will yield further.
Exactly that's what I'm saying. And to put that in more perspective,
the average family, for food, clothing and health care, an expensive
line item in the family budget, food, clothing and health care, they
spend $10,400 and for shelter, $11,600. Fully a third of that cost is
what we're putting on their backs.
Listen, colleagues on both sides of the aisle, wouldn't we be better
off just giving every family in America a check for $3,000? And we
could probably end up doing it a whole lot cheaper than $825 billion.
And by golly, that would work.
So that's what we're trying to do here tonight, Mr. Speaker, is just
point out that there's a better way of doing this. We, in the
Republican minority, who have not been included, not been asked except
asked to vote for this thing, no questions asked, no amendments, we do
have a better idea. And I know as we get further into the hour tonight,
Mr. Speaker, we'll be talking about that. And I will look forward to
that opportunity. I will yield back to the gentleman. I know there's
others here on the floor that would like to speak on this issue.
Mr. AKIN. Reclaiming my time, I appreciate, Doctor, and Congressman
your joining us and your perspective. I think when you start talking
about $800 billion or $1 trillion, those are such box car size numbers,
it's a little bit tricky to put them in perspective. I think you've
done a great job when you bring it down to the fact that the stimulus
package that was just passed last week by the Democrats, that would be
your medical care and your food and clothing for an average family.
That's what that would be. That's how much it's going to cost an
average family. Or you could say it's what it costs you to have your
house. Those are significant numbers. I think it brings it home, and we
really to ask ourselves what are we getting for this stimulus package?
And with that, I note that we have a distinguished colleague of mine
from all the way out on the West Coast, Congressman Dreier, who has
been here a number of years and is really on top of these issues. It's
an honor to have you joining us. I yield to the gentleman.
Mr. DREIER. Thanks for reminding me that I've been around a long
time. I appreciate that very much.
Let me, Mr. Speaker, express my appreciation to my very good friend
from St. Louis for taking this time to talk about what obviously is
priority number one for working families all across this country, and
that is survival; survival, because we all know how difficult it is out
there. We're regularly hearing from our constituents that they are
losing their homes, they are having a difficult time making ends meet.
This afternoon I had the chance to meet with some local officials
from one of the counties that I'm privileged to represent. And in San
Bernardino County in California, the numbers of homes that have gone
into foreclosure, it is mind boggling to see the challenges.
And I will tell you, when you think of a young family out there,
working, trying to hold things together and they're losing their home
and having a difficult time making ends meet, we all know, Democrat and
Republican alike, that it is absolutely essential that we put into
place government policies that will help to address those challenges.
Now, Mr. Speaker, my friend from St. Louis just brought to my
attention an amazing quote that his 88-year old father brought to mind
for him since he had lived through this period of time, that being the
Great Depression. And it's a quote from the Treasury Secretary, I
appreciate his putting this chart up there because I actually scribbled
it down, and I don't know if I could read my scribbling of it. But I'd
like to share it with our colleagues.
The Secretary of the Treasury, Henry Morgenthau, in 1939, as we were
tragically headed into the great World War II, and as we were, in large
part because of the war, able to emerge from the Great Depression, had
an amazing statement that he, as Franklin Delano Roosevelt's Treasury
Secretary, at the end of the Great Depression in 1939, in his testimony
provided before the House Ways and Means Committee. And in that, and
Mr. Speaker, I commend this to my colleagues. He said, ``We have tried
spending money. We are spending more than we have ever spent before and
it does not work. I say, after 8 years of the administration,'' that
being the Roosevelt administration, ``we have just as much unemployment
as when we started, and an enormous debt to boot.'' What an incredible
statement that was made by Franklin Delano Roosevelt's Treasury
Secretary in 1939. And the last line, Mr. Speaker, an enormous debt to
boot, of course, brings to mind the fact that in 1939, the American
people and financial interests in this country were financing that
debt.
{time} 1800
Today, we know that that debt is coming from all over the world, that
it is held by peoples all over the world, and that creates another very
unique challenge for us.
So I would say that, as we know that our constituents are hurting, I
believe very, very strongly that the answer to the problem of the
families who have lost their homes and of the people who are losing
their jobs is not to put into place a $1.1, $1.2, $1.3 trillion
spending package. We don't know what the size of it is going to be
because, with $1.1 trillion, if you take the $347 billion in servicing,
that would have been an $825 billion program over the next decade. It
is being debated on by our friends, our colleagues, in the Senate now.
As we look at that challenge, it seems to me that people understand
that that is not the panacea, and nowhere is that made clearer than in
the words of the Treasury Secretary who served under the great
President Franklin Roosevelt when he said that we have tried spending
money, that we are spending more than we have ever spent before, and it
does not work. I say, after 8 years of the Roosevelt administration,
there was just as much unemployment as when we started and an enormous
debt to boot.
Mr. AKIN. Reclaiming my time for just a minute, I appreciate your
perspective because we can stand here and talk about boxcar numbers and
economic theory and policy, but you are bringing it down to what it has
to do with the guy in the street, what it has to do with me.
There is a picture that always sticks in my mind. I don't know. You
know, sometimes you take in mental pictures, and there is a picture
that sticks in my mind. When we get talking about these charts and
everything, I always want to come back to this picture, and that is a
picture of a house, and sitting right there on the sidewalk is
somebody's sofa. I think about the young dads who have just gotten
married and who may have a kid or two, and they are struggling, and
they are trying to keep their heads above water, and they tell their
wives not to buy any food, and they tell their kids not to buy any
toys. They are still trying to pay this
[[Page H1021]]
debt off, and they keep getting worse and worse behind. Finally, they
go out there, and that is when they end up with that sofa that's
sitting on a sidewalk.
That is what we are talking about with these socialistic policies.
Here it all started with this ``give somebody something,'' and somehow
or other, Uncle Sam and socialism are going to make it work.
Mr. DREIER. Would my friend yield for just one moment again?
Mr. AKIN. I would yield.
Mr. DREIER. I will say that, as I look at that last line once again,
an enormous debt to boot, it brings to mind that child who is there. It
is that child who is going to be shouldering the burden of a $1.1,
$1.2, $1.3 trillion spending package that has been put before us, and
that package has already passed through this House. Speaker Pelosi has
announced that it is going to be completed by the end of next week.
I wish very much that we would spend some time looking at what it is
that we have offered as an alternative to create jobs and to allow
people to keep dollars in their pockets.
I thank my friend for yielding. I suspect that he is going to outline
the very, very viable package which can provide that immediate boost
which the American people want and need.
Mr. AKIN. Reclaiming my time, yes. Gentlemen, thank you for coming to
that point, because I don't like people to come in here and be critical
and say that it's no good, that it will not work, and then don't offer
a better alternative. The good news is that there is a better
alternative. We don't have to be doing what we are doing.
I noticed that my colleague from Georgia, again Dr. Gingrey,
Congressman Gingrey, has got a chart here.
Would you like me to yield, and do you want to explain what you have?
Mr. GINGREY. I very much appreciate the gentleman's yielding. I thank
him for that. I do have a chart I want to reference.
First of all, Mr. Speaker, I want to say that the American people are
beginning to realize that this is unlikely to work and that there is a
tremendous burden that it is going to put on them. As I pointed out on
the previous chart, it is $10,400 per family. Now, they don't get that.
That is not any money that comes to them. That is the debt burden.
Now, in fact, in a recent Gallup Poll--the very reliable Gallup Poll.
Everybody has heard of Gallup--there was a survey of 1,000 adult people
nationwide; thirty-eight percent were in opposition to this bill as
proposed, and another 17 percent said no matter what they do with it,
no matter what changes they make, this is not the way to go. It is just
as Secretary Morgenthau knew back in 1939. I wish Secretary Paulson and
Secretary Geithner could understand that. Just throwing more money at
this indiscriminately is not going to solve the problem. It is just
going to sink us deeper and deeper into a recession and possibly even
into a depression.
So, yes, we have some ideas, and of course, my colleagues are here,
and they are going to present some of these ideas.
I want to yield back to the gentleman from Missouri, but let me
quickly reference the poster.
``Sizing up the Stimulus'' is the title of the poster. Again, just to
put this into perspective, the proposed stimulus is $1.2 trillion when
you include the debt service over 10 years. So it's $825 billion and
then the debt service. Then you compare that to other expenditures, to
very important expenditures--to the Vietnam War, which was $111 billion
with a B, not a T; to the invasion of Iraq, which was $551 billion with
a B, not a T; and to the New Deal. We were referencing that, and that
is what Mr. Morgenthau was talking about. It was $32 billion, and he
said it was way too much spending, and here we're talking about $1.2
trillion.
Again, I think it would be better to cut taxes for everybody. We'll
get into that later. I know the gentleman will do that, and maybe we'll
give everybody a check for $2,500 rather than what we are doing.
So I yield back to the gentleman, and I thank him for the time.
Mr. AKIN. Reclaiming my time, I am also joined here today with
Congressman Latta from Ohio. I believe he has got some charts and can
help cast a little bit more light on exactly what this bill is that was
just passed last week and what it means.
It has $500 million for the National Endowment for the Arts. I wonder
if that's going to get the economy going. It has got $54 billion for 19
programs that the OMB--that is the Office of Management and Budget--
said were completely ineffective programs. Yet we are going to put $54
billion into programs that, by our own definition, do not work.
Particularly if you want to take a look at another one, there is $355
million for STD funding. That may put a totally different meaning on
the word ``stimulus.''
Anyway, we are joined here by Congressman Latta from Ohio. Thank you
for joining us, gentlemen, and I am interested in your perspective. I
yield.
Mr. LATTA. I appreciate the gentleman for yielding, and I also
appreciate the comments that we have already heard from the gentleman
from Georgia and also from the gentleman from California.
Just to follow up, I was not going to speak to this, but if I may, I
just happen to have in front of me the unemployment numbers during the
Great Depression and the numbers leading into the Great Depression. I
think about the statement from the Secretary of Treasury in 1939 and
what he said about what the spending had done. When President Roosevelt
was sworn into office in 1933, according to the Bureau of Labor
Statistics, we had a 24.9 percent unemployment rate.
Mr. AKIN. Reclaiming my time, let's get this number down. As to the
number of unemployed when we started into the first big recession that
was going to become the Great Depression, what was the percentage?
Mr. LATTA. According to the Bureau of Labor Statistics, in 1933, when
he was sworn in, there was 24.9 percent unemployment.
Just to kind of jump forward a little bit to the statement that was
made to the House Ways and Means Committee by FDR's Secretary of the
Treasury in 1939, that number was at 17.2 percent unemployment in this
country. So, when they were talking of their trying the spending and of
their trying to see how much they could do by spending more and more
and more to get these numbers down, it did not work.
Just fast-forwarding a little bit, unfortunately, when we got close
to entering World War II in 1941--when the United States was becoming
that arsenal of democracy--we had an unemployment rate of 9.9 percent.
Then through the main war years of '42, '43, '44, and '45, we saw our
unemployment rate go down to 4.7, 1.9, 1.2, and 1.9 percent. Again,
let's just think about that. We had 16 million Americans in uniform at
that time. We had everybody working--we had everybody in the war
plants. All of the women were working--so Rosie the Riveter was
everywhere. That unemployment rate dropped, but it was because of World
War II, not because of what was going on in the Roosevelt
administration in the 1930s.
Mr. AKIN. Reclaiming my time, your point is just what was observed by
the guy who was doing all of this Keynesian economics, this guy
Morgenthau. After spending us into tremendous debt, he just basically
said, after 8 years, we weren't able to create any jobs, and you're
saying it was basically World War II that generated the jobs; am I
correct? I yield.
Mr. LATTA. I appreciate the gentleman for yielding.
That is absolutely correct. I don't think there is any economist out
there who will say there was anything until we got into World War II
when we saw the Great Depression break. Before Pearl Harbor in 1941,
December 7, the unemployment rate was going down. Why? Because we had
Americans working in those defense plants, who were making those arms
that we were shipping overseas at the time, for example, under Lend-
Lease. So we watched those numbers start to drop, and they really
dropped, of course, during World War II when Americans were out there
in uniform and in the defense plants.
As the gentleman had mentioned a little bit earlier, one of the
things that concerns me is: Where are we going with this debt? Because
we just keep adding to it in this country.
Mr. AKIN. I hate to interrupt you. Could I reclaim my time for just a
minute?
[[Page H1022]]
We are joined here on the floor by another expert we have got, and I
want to get right back to you, but Congressman Scalise is trying to
catch an airplane pretty soon. I wanted to try to fit him in because I
think he has an interesting perspective that just ties in beautifully
with where you were going, Congressman Latta.
So I yield to you, Congressman Scalise.
Mr. SCALISE. I thank the gentleman from Missouri for yielding. I
thank the gentleman from Ohio for yielding.
What we have been talking about is a discussion we have been having
here on this floor for the last few weeks. I am very encouraged that so
many people across this country have started to really look at this
bill closely and to recognize that, in fact, the bill that has been
moving through the legislature here in Congress in the last few weeks
is not, in fact, a stimulus bill. It is a massive spending bill, a bill
that really will not do much to help get the economy started.
The Congressional Budget Office reports, of course, show that very
little of this money will go into the economy, but what it will do is
add a massive additional national debt to a debt that is already over
$11 trillion. We are already hearing that this bill is already
approaching $900 billion. Some reports show over $1 trillion. In
addition, the budget that is going to be presented in just a few weeks
by President Obama is expected to be $1 trillion out of balance.
All of this money that would be added to the national debt could add
over 25 percent in 1 year to the total national debt of this country,
whether or not it would actually provide stimulus to the economy. Most
reports show it would not create any jobs. What it would do is increase
inflation, devalue the dollar and put a tremendous burden on our
children and grandchildren. I think that is why it is so important that
we have worked so hard to come up with an alternative plan, a better
way to solve this problem. That is, to go and look at tax cuts that
will actually help middle-class families and small businesses that will
create the jobs, not government spending, which in many cases has been
spent on programs that have failed in the past and that create more
government jobs. We need to be creating jobs in the private sector, and
that is what I think is so encouraging.
As we have been presenting these alternatives, I think people across
the country have seen and have realized that this is a much better way.
It is so important after the failed bailouts of the last year that we
get this right, and that is why it is important that we have been
talking about this as people are seeing it. I think they are realizing
some of the same things that we saw in that bipartisan vote last week
when not only all Republicans voted ``no'' but when, in fact, nearly a
dozen Democrats also could not even stomach some of the spending by
their own leadership and said ``no'' as well, because there is a better
way.
I appreciate the fact that you have been highlighting this, as have
other Members, to show that there are better ways to solve this problem
for the American people and to show how the American people have, I
think, galvanized and have said the same thing. Big government spending
in Washington is not going to solve this problem. Let's let middle-
class families who are out there tightening their belts already in
States that are trying to balance their own budgets show the better way
as opposed to the failed old approaches of liberal, big government
spending.
So I think the fact that we need to look out for our children and
grandchildren is an extra highlight and why it is so important that we
get this right and that we solve this problem the correct way. That is
what this alternative plan does.
I yield back.
{time} 1815
Mr. AKIN. Reclaiming my time, Congressman Scalise, thank you very
much for your perspective, and I appreciate your optimistic and
positive approach.
We're not here just to say something won't work. We've got a better
way to solve the problem. We've got something that has worked time
after time historically, and the approach that is being proposed, which
is just massive government spending, not only did it not work for
Morgenthau, who was the guy who was the champion of this Keynesian
economics for FDR, but it's never worked subsequently. It didn't work
for the Japanese for 10 years, as they ran up huge debts, spent a whole
lot of money.
And the average American in this country has got enough common sense
to realize that just dumping a whole lot of money, if you're in
financial trouble and you're the captain of your own little family,
you're not going to go out and buy brand new cars and run up a whole
lot of debt. It doesn't make any sense. And for government to do that,
the public knows that won't work either.
But I want to get back to my good friend, Congressman Latta from
Ohio, and I did interrupt you, and I yield to the gentleman.
Mr. LATTA. I appreciate you yielding back, and I think what you're
talking about is, when we're running up these debts, I'd just like to
run across just numbers.
Let's just go back. If you look at this number on this chart right
now, we're looking at over $10 trillion, $10.6 trillion of debt that
this country owes, but let's just go back a few years, and it doesn't
take us very long to do this.
In 1979, the United States debt was at $829 billion; 1989, it was
$2.8 trillion; 1999, $5.6 trillion. And here we are 10 years later just
doubling this number, when you look from 1999 to where we are today at
$10.6 trillion.
But the real question that really concerned me is this, not only that
massive huge debt but who owns this debt, you know, and you start
looking at this chart right here. Right now, $682 billion of our debt
today is owned by China. Going across, you're looking at Japan. Japan
owns $577 billion; the United Kingdom, $360 billion; the Caribbean
Banking Centers, $220 billion; the oil exporters--we send our money
over to them. They're using our money to buy our debt. They have $198
billion; Brazil, $129 billion.
But it always wasn't this way. You know, in 1979, let's just go back
a few years again. 1979, we had foreign debt of $119 billion; 1989,
$429 billion; 1999, $1.2 trillion. These numbers are just escalating.
And the problem we have today is this. We're having a situation out
there is what happens when these other countries start stimulating
their own economy and they start saying, you know what, we can't buy
that American debt, who's going to be out there to buy that debt? And
we have a couple of alternatives; either not issue that debt or have to
put a higher interest rate out there to make these other countries want
to buy our debt. Americans are saying we're not buying it; these other
countries are.
So I have a real concern of these problems, that other countries are
owning our debt, that they could actually start dictating to the United
States. The Chinese are telling us that we have to do something about
our economy, you know.
Mr. AKIN. Reclaiming my time, I think the gentleman, what you are
saying is--and you're saying it in a pretty sophisticated way, but just
some poor old guy from Missouri, what I think you are saying, just like
when we issued all of these loans that people couldn't pay, what we're
doing, in a national sense, is we're like running down a dead-end
street, and pretty soon, as we keep printing more and more money and
keep getting more and more foreign countries buying our debt, there's
going to become a time, a reckoning, and boy, it's really going to be
unpleasant when we hit that stone wall at 70 miles an hour. Is that
getting in the direction of what you're saying, Congressman? I yield.
Mr. LATTA. I appreciate the gentleman for yielding again.
Again, you are absolutely correct. We're hitting that situation right
now. The rest of the world is looking at the same problems that we're
having in this country, but we're issuing this massive debt out there,
saying, please, buy our debt.
And all we can do is, there's been very few articles in the national
papers about this, and one of the few times we've seen some of the
articles, they're saying, well, we have to make it attractive enough to
keep people wanting to buy it out there. Well, how far is that and when
are we going to get to that?
[[Page H1023]]
My good German grandmother used to tell her grandkids this one
saying, that he who goes a borrowing goes a sorrowing. And you know,
we're at that point.
And the real question is how are the future generations of this
country, not just this generation but the next generation, and the one
right after that, going to pay for this debt and how are they going to
do that?
Mr. AKIN. Reclaiming my time, that is the question, isn't it? How is
this going to work? And I think that really there are two theories here
in terms of the way you handle the problem that we're in with the
economy.
One is you spend money like mad, which is what FDR tried to do and
turned a recession into a Great Depression, and the Japanese followed
that same example, went down the same street for 10 years, had a great
big depression over there because they had a bunch of these guys
thinking you could, quote, stimulate the economy by spending money like
mad that you don't have.
But that raises the question in that we already have the amount of
debt that you're talking about. We should have great economy if that
theory worked, shouldn't we?
Mr. LATTA. Absolutely.
Mr. AKIN. I mean, we've got a tremendous amount of debt; therefore,
we shouldn't have any economic troubles. And just as Henry Morgenthau
found out, it doesn't work. And the approach that is being done by the
Pelosi Congress and what is being asked for by our new President is
based on this Keynesian model of economics which really doesn't work.
I also promised my good friend, the gentleman from the congressional
district in Ohio, Congressman Jordan, wanted to let you have--we've got
about 5 minutes or so here. I wanted to let you have a chance to chip
in on the whole conversation. You have been very helpful, and your
thinking is highly respected, I know, in our caucus.
Mr. JORDAN of Ohio. I appreciate the gentleman for putting this
Special Order hour together. This must be the Ohio hour because I
notice the last two presiding officers over the Chamber were Ohioans as
well, and then of course my friend from just north of our district,
Congressman Latta and his expertise in this.
Think about the average family, what they saw from their government
last week. I think it's an important place to start as we think about
this discussion.
The typical family, what did they see from their government? They saw
the United States Senate confirm for Secretary of the Treasury a
gentleman who didn't pay his taxes on time. Think about it, not just
any Cabinet position but Secretary of the Treasury. Then they saw from
the House of Representatives, the other side of Congress, they saw the
House of Representatives pass a stimulus package that will not do
anything to foster and promote economic growth. I mean, that's your
government at work, America, certainly not where we need to be.
Think about this stimulus package that we've been talking about and
what it doesn't mean for promoting economic growth now and what it
means, long-term implications for our kids and grandkids and the debt
that it preserves.
First thing is this, and my colleague, our colleague from Louisiana I
think said it right. The American people get it. They have figured out
that this, quote, stimulus package is not what our country needs at
this particular time. They don't like the process that was used and,
frankly, the lack of process, the lack of the fact that the Republicans
weren't included, and they don't like the finished product, the
finished product that has such things in it like $600 million for the
government to buy a new fleet of automobiles.
I'd much rather cut taxes so that families can use that tax money,
their tax money, to purchase their own car versus giving more cars to
the bureaucrats who work here in Washington.
So they don't like the process. They don't like the product. And I
think they also understand, which was being pointed out very well by
our friend and colleague from Ohio, Congressman Latta, they understand
that this spending spree that has grabbed Washington over the last
several months is just wrong to do to future generations of Americans.
It is wrong to saddle our kids and our grandkids with this kind of
debt, the kind of debt that Congressman Latta was pointing out and I
know Congressman Akin has pointed out earlier in the hour.
Think about this. We're going to run a deficit this fiscal year
approaching 10 percent of gross domestic product. Never in the history
of this country have we run that kind of debt. You have to go back to
World War II when we're fighting a world war to when it's close to 6
percent of GDP. This year it looks like it's going to be close to 10
percent of gross domestic product.
They understand that's not the direction to go. They understand that
what really fosters economic growth is reducing the tax burden on
families, on taxpayers, on small business owners so they can keep more
of their money, put it to work in the private sector, put it to work in
their small business, creating jobs, protecting jobs, and promoting
economic growth for the future. That's where we need to focus.
Short-term, fast-acting tax relief versus big government spending.
The American people understand tax relief is where we need to go.
That's the alternative we've been supporting. That's the alternative
we'll continue to support. And the good news is, that's what the Senate
is beginning to look at.
We did a press conference today with some of the Senate Republicans,
and they are talking about focusing on some of the same tax cut
provisions we tried to get in the bill over here on the House side.
Mr. AKIN. Reclaiming my time for just a second here, what you're
talking about is where I really wanted to get to with this conversation
tonight.
We're not just saying things won't work. Yes, what's being proposed,
putting the government tremendously into debt, a lot Federal spending
does not solve the problem, but there is a way to solve this problem.
It's just going to require a little discipline, like some good
wrestlers in the State of Ohio know, and I want to let you continue
with that because we have a solution, a positive way, a bold approach
to take care of this problem. We don't have to turn a recession into a
great depression. But the solution that's being proposed always created
depressions from recessions. We don't want to do that. We've got a way
to solve the problem.
I yield.
Mr. JORDAN of Ohio. I appreciate the gentleman yielding.
My colleague said earlier that if big Federal Government spending was
going to get us out of this mess it would have happened a long time ago
because we've certainly been doing that. And you're exactly right. The
easiest thing in the world to do for politicians, for policy-makers,
for Members of Congress is to spend money. It's the easy thing to do.
The tough thing to do is the discipline thing to do. I had an old
coach in high school and he talked about discipline every day in
practice. And his definition was this. Discipline is doing what you
don't want to do when you don't want to do it. It meant doing it his
way when you'd rather do it your way, but it left an impression on me.
And frankly, the disciplined thing to do is to say we're going to
stop this excessive spending; we're going to reduce the tax burden here
so that business owners and families can have more of their money and
promote economic growth and do the things that we know work in an
economy. That's what we have to focus on and have the discipline to say
we're not going to continue to spend and spend and spend and mortgage
our kids' and grandkids' future.
Mr. AKIN. Reclaiming my time, I very much appreciate your perspective
in getting to the positive solution.
And I would yield to the gentleman. We've just got a minute or two,
but if you'd like to join us, I yield.
Mr. FORTENBERRY. I want to thank the gentleman for having this very
important discussion tonight on the House floor.
My fear is what we've done here in the name of stimulus is actually
create an unrestrained, unsustainable spending bill. And since the year
2000 or so, it's very important to note that the Federal Government has
actually grown by about 60 percent. We've been on an 8-year stimulus
run in the name of spending, if you will, and yet we remain in economic
straits at the moment.
[[Page H1024]]
I think this is very important to point out because the other problem
here is the massive amounts of debt that we're going to compile if this
bill should be passed. Debt that is unpaid for--the stimulus bill not
being paid for--will be passed along to future generations, children
and grandchildren, or it will be sold, the wealth asset value of this
country sold overseas to foreign debt holders, or it will come out in
other forms of taxation such as inflation.
Mr. AKIN. Just reclaiming my time for a second, you're talking in
kind of economic terms, but further, what does that mean to the average
person in our district? It means a lower standard of living, doesn't
it? It means you can't make ends meet. It means you're not going to buy
the food you want to buy. And I yield again.
Mr. FORTENBERRY. Inflation is a very regressive form of taxation,
particularly among the most vulnerable among us.
With that, let me say, I don't want to see any family experience
unemployment, any business take a downturn or any family experience a
foreclosure. And with that said, I think it's very, very important that
we work very hard to get this right, a plan that makes sense, that
maximizes economic productivity through any type of new governmental
policies that we set, but a plan that is also potentially paid for over
time and that does have some new bold ideas in it.
One of the problems here as well, though, is that much of the
spending is targeted to States, and some States like Nebraska, we've
been very fortunate to be insulated from these larger downward economic
trends. We have a strong ag economy that is hitting some bumps at the
moment, but nonetheless, we also have a set of values, if you will,
where people work hard and take responsibility for themselves and care
for their neighbor. Businesses, as well as our citizens, have made
prudential decisions about buying and lending, and we haven't suffered
like the rest of the country in this regard.
But with that said, this bill effectively asks Nebraskans to
subsidize other States that may have been poorly governing and want the
Federal Government basically to make the tough decisions for them, not
force them to make the tough decisions.
Mr. AKIN. Reclaiming my time, I think what you're saying in a polite,
sort of sensitive way is California has been spending money at an
incredible pace, and the question is, should Nebraska have to subsidize
California? And that's really what we're talking about, isn't it? I
yield back to the gentleman from Nebraska.
Mr. FORTENBERRY. I thank the gentleman for the time.
I think we are. It's a very important point to be made that a lot of
communities in a lot of places have had to make choices with limited
budgets to set priorities and have not rushed up to Washington to say
bail us out, help us out. They have made those tough choices
responsibly, and it's places like those, like Nebraska and other
places, that I fear are subsidizing other places that have not
performed admirably in terms of governance.
Another point here is I think there are some bold, new, innovative
ideas in this overall package. I think they could be potentially
considered as stand-alone measures. President Obama has a strong focus
on, for instance, alternative energy development for a sustainable
energy future.
{time} 1830
This economic crisis was precipitated by, you recall, a very high
spike in energy costs which accelerated other difficulties in the
economy. But we've almost forgotten that now. Can you imagine where we
would be if gas were $4 a gallon right now? So we've dodged a bullet
right there.
But trying to get underneath the question as to what our real
economic vulnerabilities are, including our overdependence on foreign
oil and fossil fuel in general, is an important policy consideration.
So there are some admirable components here that might ought to be
considered as a part of a reasoned stimulus plan that has a payment
schedule for it, or stand alone separately.
So we don't want to stand here and simply oppose everything in that
regard. But we are halfway.
Mr. AKIN. Reclaiming my time.
I think we've got just a very short amount of time left.
But your point is so good. Our objective is not just to say what
won't work but to say what won't work because we know it won't work,
and instead, let's adopt something that's helping those families. I was
talking about it earlier, the picture that just keeps jumping in my
mind--and this is happening all over the world because of our lack of
bold and decisive and disciplined action here--the picture that comes
to my mind is the house with the foreclosure and the easy chair and the
sofa sitting on the sidewalk. And I'm thinking about the mom or the dad
of that family and the pressure that they feel where they're just
dumped right out of their house. This is not just economic numbers,
this is the people of our country.
I yield my last 30 seconds.
Mr. FORTENBERRY. Well, again, I'm grateful.
We don't, again, want to see any family suffer any unemployment or
suffer any situation like that. But I think this letter that I got
today from a constituent back home from Gail in Fremont says quite a
bit. She said, ``I'm writing to let you know I oppose the stimulus,
Congressman. I'm opposed,'' she adds, ``to the overwhelming debt the
government is all too willing to place on us with no long-range plan
for getting us back on stable ground.''
She goes on, ``What is the Federal Government doing without during
this emergency?'' She says, ``In my home when there's no money, we do
without. We don't spend money we don't have. I'd rather tighten my belt
for a time than to live the rest of my life under the burden of
increased taxes for this bloated stimulus package.''
Unrestrained, unsustainable spending is the issue here, and we need
to maximize economic productivity through smart thinking about what
really is stimulus.
Mr. AKIN. Reclaiming my time.
Thank you, Madam Speaker.
____________________