[Congressional Record Volume 155, Number 39 (Thursday, March 5, 2009)]
[House]
[Pages H3045-H3052]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           THE CRAMDOWN BILL

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from Iowa (Mr. King) is recognized for 
60 minutes.
  Mr. KING of Iowa. Mr. Speaker, I appreciate the honor to address you 
on the floor of the House of Representatives.
  As I came in here awaiting my appointed hour, I was fascinated to 
listen to the Members who have spent the last hour talking about what 
is happening to our country, what's happening to our economics. And I 
wanted to take this thing another step.
  Listening to the gentlelady from Minnesota always has me entranced as 
to how deeply the thought goes on the economics on that viewpoint 
particularly.

                              {time}  2145

  But I will take it another level from the level of a million and a 
half mortgage down to $1 million in the pocket that has been described 
here. Let me say that a borrower can also misrepresent their income. 
They could fraudulently misrepresent an appraisal on that property. 
They can misrepresent their job status. They could commit actual fraud.
  They could misrepresent or, under false pretenses, obtain this loan. 
And the bankruptcy judge, who would now, under the provisions of this 
language that passed the House today, this bankruptcy judge couldn't 
even consider the actual fraud or the misrepresentation or the false 
pretenses because we offered that language in the Judiciary Committee.
  In fact, I offered it as an amendment, and it passed the Judiciary 
Committee by a vote of 21-3. It was not quite the unanimous judgment of 
the Judiciary Committee that we ought to prohibit any of these cramdown 
provisions to anyone who has misrepresented themselves in order to get 
this mortgage.
  But, after the fact, after the amendment passed the Judiciary 
Committee 21-3, without any notice to any of the Members that I am 
aware of, the language was changed in the bill that came to the floor, 
which we found, out of due diligence of our staff, reading down line by 
line, to make sure there wasn't something going on behind the scenes, 
well, there was. They changed the language.
  And the language in the bill, which they have refused to even allow a 
vote to correct, get back to what the Judiciary Committee approved, 
that language in the bill now says that the borrower will have 
available this relief under the bankruptcy law unless they have been 
convicted of fraud, not out and out open fraudulent action or 
misrepresentation or obtaining a loan under false pretenses, that's not 
good enough for the bankruptcy judge to even consider that in his 
evaluation on whether he is going to dial the 1.5 million mortgage down 
to half a million and let him walk away with a million dollars in 
profit out of the deal. But even if they walk away with 
misrepresentation, they can't consider that because this Congress has 
said only can he consider it if the borrower is convicted of fraud.
  I yield to the representative from Minnesota.
  Mrs. BACHMANN. I thank the gentleman for yielding.
  What's amazing about this bill, this cramdown bill, this historic 
bill that was passed today, is that potentially who are millionaires, 
who received loans and the multimillion dollar level of loans, 
literally could have received a loan with zero down. So they could have 
gone into a home, they had absolutely no skin in the game, zero money 
down.
  In fact, they could have had a negative-equity loan, which means they 
could have gotten money back at closing. So they could have had zero 
down with money back at closing and then they could have gone and taken 
out a home-equity loan based on the value of their property. This was 
happening.
  I mean, let's not forget, just as recently as 2005 we were seeing 
housing prices go up and up and up. Remember, half of the houses that 
went into foreclosure were investor homes.
  So people were out there going into homes, thinking they were going 
to flip them, getting in so highly leveraged, and they got into this 
game. And now, if you own that property, you will be able to go, and 
you don't even have to answer your phone if on your caller ID you see 
it's your lender, you don't even have to pick that phone up and talk to 
your lender. Under this legislation we are going to start seeing 
television commercials where its plaintiffs' bankruptcy attorneys 
saying call me, call me, call me. I can get you a better deal on your 
house.
  We are seeing all those ads on TV now. You don't have to pay your tax 
bill, I will get you off the hook. You don't have to pay your credit 
card bill. Don't worry, I will get you off the hook, but the one thing, 
I was born in Iowa, just like our great representative, one thing we 
learned when we were growing up, we have to pay our bills. Because if 
we don't pay our bills, our grandparents taught us somebody else is 
going to, and that's tantamount to stealing.
  What I saw today in this cramdown bill reminded me of the 10 
commandments and what the 10 commandments teaches to all people in all 
cultures, and that's that we shouldn't take what doesn't belong to us. 
When I look at this legislation and it makes clear that people can go 
before a bankruptcy judge, they can get a false valuation on their home 
and have their whole debt essentially wiped out. And if they sit on 
that home for 5 years, they could walk away and skate on a profit at 
somebody else's expense, I don't know what else you call it. I have no 
idea what else to call it.
  I just know this is immoral. This bill that passed today is nothing 
short of immoral and people should be ashamed of putting their name on 
this bill.

[[Page H3046]]

  Mr. KING of Iowa. There is no question, I agree, it's immoral. It 
undermines the underpinnings of this free market society that we are. 
It breaks the contract between property and assets and borrowers and 
lenders.
  When that contract is broken, when the faith is broken--and I have 
sat in the bank many times with my hat in my hand trying to start a 
business. When I started a business in 1975 and I had a negative net 
worth of $5,000, I went into a capital intensive business. So I did a 
good job of marketing, at least that's one of the things I was able to 
sell, the business idea. But many times I was short of enough cash to 
make things work.
  And I would going into the bank, and I would have to justify it every 
time. I would have to have the assets underneath that in order to 
convince the lender that I was going to be able to pay the loan. And I 
had to have the prospective accounts receivable and they had to be 
represented right and accurately. I had to have a balance sheet 
continually, at least annually, often monthly profit-and-loss 
statements--all of this to justify a business operating loan that I 
could keep my employees work and be able to pay the bills on time.
  All of that level of integrity that's built into that relationship 
between the borrower and the lender, the time-honored relationship 
between collateral and credit and character and capital, is being 
ripped asunder by this bankruptcy bill, by this cramdown bill.
  And, so, now what will happen is, lenders, those who decide they are 
going to still be in the business of mortgage lending, they have got to 
go back and reevaluate this equation, this business equation which says 
the degree of risk has to be proportional to the potential for profit. 
That's the equation. You put the equal sign in the middle, degree of 
risk, potential for profit.
  Mrs. BACHMANN. Let's remember, there is no free lunch here. That's 
what Milton Friedman, the great economist said. There is no free lunch, 
because when a judge writes down, let's say, the multimillionaire went 
out and bought that million dollar and a half house, now the fair 
market value is $500,000 now. So the bankruptcy judge, with a stroke of 
the pen, said ``voila,'' now you only owe 500,000 when before you 
thought you were going to get a million and a half. The banker gave you 
a million and a half. What happened to that million dollars? Where did 
it go?
  Well, remember, when the banker gave that money out and got the house 
back in collateral and got the promise from the borrower that the 
borrower was going to pay back that million and a half plus interest, 
the banker sold the right to that mortgage. He packaged it up in 
mortgage-backed securities and he sold those securities.
  So now those mortgage-backed securities, which kind of started this 
whole meltdown in the first place, because we are worried about their 
valuation, now we have mortgage-backed securities that we thought were 
toxic before and in trouble before? Now these mortgage-backed 
securities, after this bill that was passed in this Chamber today, have 
just been made radioactive. There is no one who will touch these 
mortgage-backed securities.
  So in a very odd, circuitous sort of way, this administration, and 
those that run the House and run the Senate, have just guaranteed that 
mortgage-backed securities are worth even less than they were worth 
before today. So who is going to pay for this loss? Eventually these 
insurers and these bondholders, because there was a carve out for AAA 
bond holders in this bill.
  I don't know if you are aware of that, but if you are a AAA 
bondholder, you skate on this bill. You don't have to pay for the 
losses. But if you are anything else, a BB bondholder, you lose on this 
deal.
  And so where will these people go, these insurers go? People will go 
to the claims court, and they will make an application at the U.S. 
Claims Court.
  Guess who will be paying the claims? The United States taxpayer, the 
forgotten man, the chump at the end of the stick will be the United 
States taxpayer who ends up paying the freight on all of these big 
ideas.
  At the end of the day, you have graveyard economics. And what we know 
is that there is a better way out of this. There is a positive ending. 
We don't have to have a sad ending.
  That's the grief that I think we have been living with these last, 6, 
7 weeks. We have seen a very sad ending to our economy, but we know 
there is a great ending to the economy. There is a completely different 
alternative that we can offer the American people.
  Mr. KING of Iowa. Well, I thank the gentlelady from Minnesota, and I 
would point out that the point you made about these bundles of 
mortgage-backed securities that are tranched and sliced and diced and 
packaged and repackaged and sold up and down the chain and coalesced 
into certain values of securities, have created toxic, truly toxic 
assets. The value of these assets cannot be considered any longer. They 
cannot be evaluated.
  This degree of risk can't be evaluated as being proportional to the 
potential for profit. And we watched these markets tank nearly every 
day, nearly every day during the Obama administration.
  In fact, I had some interesting numbers that I ran today and I think 
they will be informative to everybody in this country, and I don't 
think anybody has asked this question until today. So I went back, and 
I am watching the Dow just tailspin. So I went back and took a look at 
has any president in history ever had such a, let's me say, negative 
start economically at the beginning of their administration?
  So I went back to November 4, the election of 2008, took a look at 
where the Dow was on that day as our lead indicator of our economic 
growth or shrinkage, as it might be, and evaluated the first four 
months of President Obama's from the moment that the markets recognized 
that he would be the President being elected until today, 4 months from 
that period of time, November, December, January, February, roughly 
speaking, and compared that to the previous presidents as long as we 
had electronic records.
  And it turns out to be this, as one might expect, FDR, up until this 
time, got the worst welcome from the Dow Jones Industrial Average. In 
fact, he got the two worst we will comes on record. In 1932, in the 
first 4 months, the Dow drooped 16.63 percent. On Franklin Delano 
Roosevelt, that was their level of lack of confidence in his election 
in 1932. In his election in 1940, it dropped 9.3 percent. Those two 
drops are the two largest in history of welcoming a presidential 
election by the market reacting.
  And, by the way, the most positive reaction was, both of us born in 
Iowa, I will tell you, was Herbert Hoover, and we could go into that, 
perhaps. But in any case, President Obama's start is the worst economic 
start in the history that I can trace back electronically that goes 
back at least to Herbert Hoover's administration.
  Franklin Delano Roosevelt saw the markets dropped 16.3 percent in the 
first months after he was elected in 1932. But, today, the first months 
after President Obama was elected, we have seen our Dow Jones 
Industrial Average drop 31.49 percent in that period of time.
  It's almost twice as much of a drop and, under this administration, 
as any administration in our electronic history. I think it's 
breathtaking, the message that the markets have shown.
  And this, by the way, isn't just a President Bush economy. If you 
will recall, President Obama supported the $700 billion bailout plan. 
He came to Washington to work on it too and decided he would support 
the proposal.
  This Congress approved, I can go over our resistance, $700 billion, 
first half, $350 billion went essentially right away to pick up these 
toxic assets that then we thought were toxic today, are far more toxic 
than they were. The other $350 billion had to be released by Congress. 
That was done so under the Obama administration.
  This is his economy. He is fond of saying that he had inherited a 
trillion dollar debt. Well, this debt is increasing more and more each 
coming week.
  In fact, tonight on one of the networks, they announced that 
President Obama's wish list, if you add it up, comes to $20 trillion, 
$20 trillion. Now, I have not put all the line items in that, but that 
is a breathtaking number, $20 trillion.
  And how can we have a level of confidence in this when you are seeing 
this kind of a response? Every day we have negative financial news. I 
am seeing

[[Page H3047]]

nothing that comes back that shores up confidence in this marketplace. 
The markets are going to react to an opportunity to make profit, and 
the government is stepping in and nationalizing and interceding 
themselves in the marketplace, the confidence in the marketplace is 
going down, not up.
  You see the asset value of our lending institutions, our mortgage 
bankers, going down day-by-day. These institutions were going to be 
shored up, and they haven't been shored up. We haven't let the markets 
work. There is one thing we know for sure that if we keep our free 
markets together, if we don't get everything nationalized and all 
socialized, we will recover from this. But the question becomes, how 
long does it take?

                              {time}  2200

  Mrs. BACHMANN. I thank the gentleman from Iowa, Representative King, 
for yielding.
  Conversely, you had given the numbers about how the market has been 
tanking in the last 7 weeks since the Obama administration took over. 
Now, compare and contrast that to the Bush tax cuts. The first quarter 
after the Bush tax cuts were put into place, already we saw revenues 
increasing to the government and we saw an economic uptick. That's how 
quickly those incentives will come into place.
  I handed out literature this week to various colleagues to show that 
our economy on its own, in a miraculous way, which always happens, is 
already healing itself. We saw that we had about 5 million existing 
homes out on the market. That number has now dropped to about 3.8 
million. So the housing stock is already in the process of depleting 
and demand is coming up. Interest rates are coming down. In some 
segments of our economy, we see 85 percent home sales that are being 
completed. So we're seeing a turnaround already in the housing market, 
although now with cramdown, that may change a little bit after the 
lesson of today.
  But also in the auto market, we're seeing pent-up demand building. We 
saw a very low number of sales that were completed in February, about 
42 percent fewer sales. That's a dramatic low in auto sales; however, 
we're seeing pent-up demand. People want to go out and buy a car. But 
because of the news that they have seen come out of Washington the last 
7 weeks, people have been unwilling to spend.
  But what is it that would turn it around? That's the positive answer 
and the positive solution that can be on the horizon. We could turn our 
economy literally around if we would do a few things: One of them would 
be that all of this money that has been committed, and if you go back 
to about January of 2008 and you take a look at all of the commitments 
that the Federal Government has made through both the Bush and the 
Obama administrations, the trillions and trillions of dollars, if we 
would reel that money back in that hasn't been lent yet, that hasn't 
been spent, if we would reel those commitments back in and not spend 
them, because guess what, all that spending hasn't worked yet; so how 
is spending $20 trillion more going to turn it around? If we would pull 
that in and if we would give the marketplace one thing it's been 
begging for but hasn't gotten: certainty. The marketplace needs 
certainty. And what the Obama administration has given them is buckets 
of uncertainty. So that's why we are seeing the economy tank.
  So if we do a few very simple things: One, for at least a 3-year 
minimum, zero out capital gains so we could get people off of the 
sideline, sell their assets, whether they're stock, equities, whether 
they're buildings, whether it's homes, sell their assets and have zero 
capital gains, minimum 3 years, preferably for 4 years, people would 
get in the game and they would start buying and selling and creating 
wealth because that, after all, is the genius of America. The ability 
to have private capital formation from which wealth comes and which you 
create more wealth.
  Number two, the United States, as Representative King knows, has 
about the second highest corporate tax rate, business tax rate, in the 
world at about 34 percent. If we would take that corporate tax rate 
from 34 percent down to permanently 9 percent, we would make America in 
this global economy, where we have an economic global malaise going on, 
we would become the situs to do business, and we would bring capital 
from all over the world because investors all over the world are 
looking for safety. They're looking for certainty. If you can have zero 
capital gains, 9 percent corporate tax rate, then for our United States 
citizens, cut everybody's taxes 5 percent on the margin. So you cut 
everybody's taxes down.
  And then let people know what's going to happen with the death tax. 
We all know the right year to die in the United States is 2010 because 
then you have zero estate tax. But after that President Obama wants to 
institute a punishing high tax rate. What we need to do is just repeal 
the immoral death tax. That will bring more certainty to the 
marketplace than anything else. Our problem, then, Representative King, 
would be where are we going to find the workers to find all the jobs 
that would be created? That brings certainty. That brings the ability 
to have private wealth creation, and it gives us a pro-growth, pro-
prosperity climate, rather than what we have been dished out for the 
last 7 weeks: a graveyard economic climate.
  Mr. KING of Iowa. I thank the gentlewoman from Minnesota.
  And I really appreciate your bringing up the suspension of the 
capital gains tax. That's an issue that I have advocated for strongly. 
I have advocated for suspending it for 2 years. I like the idea of 3 
years. I'm not going to quibble over the 3rd year. But there is so much 
capital that's out there on the sidelines today. There is at least, or 
there was, at least, before the market spun downward, $13 trillion in 
U.S. capital that's stranded overseas because it's faced with capital 
gains tax if it comes back into the U.S. marketplace. If we suspend the 
capital gains tax, theoretically all that money could come back into 
the U.S. market. It will find the smartest place for it to be invested. 
I don't think it will be $13 trillion. I think it could be $2 to $3 
trillion, which is a tremendously large number.
  I want to also suspend capital gains tax on rescue capital that would 
pick up these toxic assets. That has shifted since then, since I 
introduced that legislation, but suspending capital gains tax does the 
job, and it freezes up the capital that sits along on the sidelines.
  And in our corporate income tax, the second highest in the industrial 
world, to scare our capital out of the United States and send it 
overseas and then try to legislate a way that we can chase it with the 
IRS taxman is the wrong way to go.
  There's a reason why that capital is going overseas. Because it's a 
smarter investment. Capital is always smart, and the death tax is just 
cruel. It is cruel. I have, and I think many Members have, received 
calls from constituents whose mother or father was lying in the 
hospital and they're making a decision whether to put them on life 
support or to take them off life support. And every time this subject 
is ginned up here in this Congress about whether and when the death tax 
will be repealed or, as people on the other side of the aisle advocate, 
whether it's going to be put back on again and there won't be any 
relief, there are decisions made that are just perverse, to put a 
family through having to make a decision on whether they're going to 
plug somebody in or unplug someone in an end-of-life decision. That's 
what government does.
  So for me, I would eliminate the IRS and the entire Federal Income 
Tax Code. I would take the tax off of productivity. It was Ronald 
Reagan that said that what you tax you get less of. But the Federal 
Government in its presumed wisdom has the first lien on all 
productivity in America. If you have earnings, savings, or investment, 
Uncle Sam is there with his hand out to take the cash and put it in his 
pocket before you get the share you're working for. If you go to work 
tomorrow morning and you punch in at eight o'clock, just kind of think 
of that little ding when you punch the timecard. Uncle Sam's goes out. 
``I want mine,'' he says, in a nice subtle way until he gets it and he 
puts his hand in his pocket. If you're investing, if you're selling 
real estate, if you're collecting interest on a deposit in the bank, 
your earnings, your savings, your investment, stocks and dividends and 
shares, all of that that's converted to Uncle Sam, he's there getting 
his share out of productivity.

[[Page H3048]]

  But if we adopt the fair tax, the national sales tax, then the result 
of that is we take the tax off of production and we unleash the 
American production machine and everyone can be an entrepreneur, 
produce all they want to produce, earn all they want to earn, save all 
they want to save, invest all they want to invest, and then make the 
decision on when they want to pay taxes by when they do their 
purchases. Not a VAT tax, the last stop on the retail purchase, sales 
and service. It totally transforms the dynamic, and it gives America a 
28 percent marketing advantage over products made in the United States 
versus products that are imported into the United States. That saves 
Detroit. It saves the UAW. It saves the National Association of 
Manufacturers. It puts them on the profit side and makes America again 
the industrial powerhouse for the world and improves our national 
security all at the same time.
  In fact, to wrap it up in a little nutshell here, everything good 
that anybody's tax proposal does is done by the fair tax. And 
everything that anybody's tax proposal does that's good is done by the 
fair tax. It does them all. It does them all better. It changes the 
dynamics of taxation. It unleashes the free market economy.
  But instead of that, we're here punishing producers. We're punishing 
the people that earn, save, and invest. We want to raise taxes on 
everybody in America. This 95 percent of Americans getting tax relief 
and taxing the top 2 percent or 5 percent under this idea of the 
President, Mr. Speaker, doesn't hold up. We've got the carbon tax at 
least that's imposed on this. That's a tax on everyone in America that 
uses anything that uses energy. And I would defy anyone to come up with 
anything we use that doesn't use energy. And the people who are at the 
lowest end of the economic scale are the ones that are paying the 
highest percentage of their income for energy. They'll pay the highest 
taxes as well.
  I yield to the gentlewoman.
  Mrs. BACHMANN. There was an article that came out in Congressional 
Quarterly last April, and it was interesting. It said with the carbon 
tax, it doesn't matter if you are manufacturing or if you are helping 
orphans in Africa. Every human activity will involve an aspect of the 
carbon tax. So it is very disingenuous for our new President, who stood 
right behind you last just Tuesday during his State of the Union 
message, when he looked into the camera and he told the American people 
if you make less than $250,000, you won't pay one dime more in tax. 
Now, would that that were true. I wish it was true. But we all know he 
contradicted himself with his own words in the same speech when he said 
he wants to introduce the energy tax because energy tax will impact 
everyone.
  We all remember how much fun it was last 4th of July when we were all 
paying well over $4 a gallon. We thought we were going to see gas at $6 
a gallon, $8, $10. We didn't know where gas was going to top out. Every 
morning you'd get up and the first thing you would do is you'd look at 
your local gas station and see is it up 10 cents today, 20 cents today? 
The economy felt like it was out of control.
  I am very concerned that here we are in an economic downturn when the 
demand for energy is low and so we're seeing the price of gas go down 
accordingly. This is exactly when we should be revisiting the American 
energy debate. And we should open up every form of energy for 
exploration that there is. Coal isn't evil. Oil isn't evil. Natural gas 
isn't evil. Wind isn't evil. Biofuel isn't evil. Solar isn't evil. None 
of these forms of energy are evil. But the interesting thing is the way 
that the Obama administration is approaching energy, they make evil the 
production and use of one of the basic building blocks of our economy. 
That's energy. This is a warped view of America. It's not the view that 
we grew up with in Iowa. It was not our commonsense understanding of 
fairness. We don't want to punish people for trying to get ahead. We 
don't want to punish people for trying to succeed and have a good 
economy. Fairness is what we need to be about. The Tax Code today has 
nothing to do with fairness.
  The proposition you were talking about was fairness for the American 
people. I talk to people at all economic strata, and they say everybody 
should have to pay something. Everybody should have to pay something in 
taxes. People just shouldn't be exempt. It's not fair that just a few 
people pay taxes while other people don't. And the proposal that you're 
offering with the fair tax is one that should be debated in this House. 
The flat tax is one that should be debated in this House because 
everyone benefits by having a strong country. Everyone should have to 
participate in a simplified, easy-to-figure-out Tax Code where, no 
kidding, your tax return could be about this big and you could fill in 
an amount and you're done. Or you could even be simpler and just pay 
tax every time you go and you purchase something at the point of sale. 
There are a lot of ways we could do this, but it needs to be fair and 
it needs to be shared.
  Mr. KING of Iowa. Reclaiming my time, the tax structure that we have 
and the language that was delivered here about everyone gets a tax cut 
unless you're in the top 2 or 5 percent, or above $250,000, but the 
insidious tax that goes in, the carbon tax that permeates every aspect 
of our economy and punishes the poorest among us, in a way it's like 
the cigarette tax. You add 61 cents a pack to cigarettes. The folks 
that smoke the most are the ones at the lower end of the income 
bracket. They are the ones who can least afford it. But we impose a tax 
on them and we call that a ``sin tax.''
  Then you get a promise that comes out from the White House that says 
``I am going to create or save 3\1/2\ million jobs.'' Now, the first 
time I heard that, okay, but somebody's going to call him on that, and 
really nobody has yet. The President is going to create or save 3\1/2\ 
million jobs. Now, think about what that means. If you were down there 
in maybe grade school and they were teaching you how to rationalize 
someplace between two plus two and two times two, you would come across 
the rationale of ``create or save'' leaves a little escape clause in 
there. Which jobs would be created and which ones would be saved? If 
they're not defined and we have a workforce of about 142 million here 
in America, as long as there are 3\1/2\ million jobs left, the 
President can claim he saved them.

                              {time}  2215

  So it fits the definition. That is how broad this is. And we are to 
be mobilized by this and moved, to leap into this giant leap of faith 
of trillions of dollars in borrowed money, the intergenerational theft 
that John McCain and Michele Bachmann will talk about and we talk about 
as well, it is intergenerational theft on a promise that 3.5 million 
jobs are going to being be created or saved.
  Here is another one. Cut the deficit in half. I remember where I 
heard that. That was actually President Bush that advocated he was 
going to cut the deficit in half in 5 years. I remember that was the 
timing.
  Our current President would cut the deficit in half by the beginning 
of his second term. But we are going to create this large deficit, and 
then well have something more easily sliced in half. Maybe he inherited 
a $1 trillion deficit, but we have a $1.75 trillion deficit advocated 
today. It is pretty easy to cut it.
  Let's just say you weigh, I don't want to use your weight, say you 
weigh 200 pounds and say I am going to reduce my weight by 10 pounds. 
Then you could gain 20 and lose 10 and you have lost 10 pounds. That is 
kind of how this thing works, by cutting the deficit in half. We grow 
the spending and then slice the spending down and advocate or at least 
allege that the deficit has been cut in half.
  I yield to the gentlelady from Minnesota.
  Mrs. BACHMANN. I thank the gentleman.
  I would love to see that circus trick performed. When does government 
grow and ever contract down by half? It doesn't happen. Find an example 
where it happens. It doesn't happen.
  Here is my concern about what the Obama administration may be doing. 
I am very concerned about the inflationary aspect. Inflation is the 
cruelest tax that you can inflict on anyone, especially when you have 
senior citizens who spent a lifetime being prudent, working hard, 
scraping, maybe saving 10 percent of their income in every check, 
putting it away, squirreling it away, helping their kids out, paying

[[Page H3049]]

for weddings, paying for college, paying off things so you could have a 
nest egg. And here you maybe have $200,000 or $400,000 in the bank, or 
$125,000 in the bank, and then you look at the last 7 weeks America you 
see that your 401(k) has dropped a third in value. Maybe by this point 
it has dropped 50 percent in value, your 401(k). That is just with the 
current economic decisions we have seen thus far, before this 
administration has spent $20 trillion.
  Then you look at the Federal Reserve, which has been busy in various 
parts of this city printing money, 24 hours a day, 7 days a week, 
pumping money out into the money supply, inflating the currency.
  What have Americans been doing? When all of this started, the U.S. 
savings rate was negative 1 percent. During the Depression the savings 
rate was negative 1.5 percent. You know what the savings rate was in 
the month of January? Plus 5 percent.
  Why is that? Human action. Americans are scared to death about the 
economy, so they have taken the money that they have had and they have 
held it. They decided not to buy. Hence we see the anemic car sales 
going on, because they are scared to death. Every day we see the Obama 
administration saying they want to spend this many trillion, that many 
trillion. Now they want socialized medicine. Now they want a carbon 
tax. It is like more, more, more, and people have figured out this 
calculus doesn't add up.
  So if we inflate the money supply, as the Federal Reserve may do in 
conjunction with our current Treasury Secretary and the Obama 
administration, we could potentially see our dollar, if you own a 
dollar in 2008 and the Federal Government pumps extra dollars in, in 
2009, but there is no additional productivity, there is no additional 
value behind those dollars, it is just paper that comes into the 
system, if you have $2 in your hand and no more additional worth, you 
really only have 50 cents. In other words, that dollar isn't worth a 
dollar anymore, it is only worth 50 cents.
  So inflation is a cruel tax. Just because your 401(k) maybe lost 50 
percent of its value because of the stock market, you could see your 
401(k) lose another half because of the cruel tax of inflation. That is 
the next policy that we need to see over the hill that may be coming 
with these Obama policies.
  I don't know if the gentleman from Iowa would like to comment.
  Mr. KING of Iowa. Reclaiming my time, I will say the other 
alternative is to have a huge growth in our economy, a booming economy, 
a booming economy that would grow us out of this so we don't have to 
put so much money into the market that inflation devalues our dollar.
  Now, I would ask, how is that going to happen in the face this 
massive growth in government and in government spending? Where is the 
entrepreneurial spirit, when it has been killed and squelched by 
taxation, by overregulation, by messages that come out that are against 
energy. Nearly every sector of our economy is under assault from people 
that don't believe in free enterprise.
  I would go further and say there is a huge philosophical divide that 
goes about right down the middle of the aisle right here. This is free 
market people over here. They believe in personal responsibility and 
strong families and the Constitution and the rule of law. The pillars 
of American exceptionalism are often defined in the dialogue over here. 
They are often derided by the dialogue that comes from this side of the 
aisle. Now it is an all out assault on our institutions.
  I had a time a couple of weeks ago where I sat down with some 
dissidents in Russia. They said to me that Putin had destroyed nearly 
all the democratic institutions in Russia. They said we don't any 
longer have a fair election, we don't have an independent press, we 
don't have an independent judiciary, we don't have an independent 
legislative body in the Duma. In fact, I had to stand in line for an 
hour just to get in the door.
  But those are four of the institutions that they mentioned, and they 
said our freedoms are really gone. There is no place else for Putin to 
go to take away any more of our freedom, because he now owns the 
institutions and has taken over of the institutions of freedom. They 
called it democracy.

  Here we have institutions all under assault. Each one I mentioned is 
under assault. We don't have an independent legislative process 
anymore, not when a bill can come out the Speaker's office directly to 
the floor without committee action, without amendments being allowed in 
subcommittee, no subcommittee action, no committee action, and the 
floor action is a bill that comes down from on high at 11 o'clock at 
night that hits the floor the next day with no amendments allowed and 
an hour's worth of debate, and then it is crammed out of here and on 
over to the Senate before the public can wake up and even understand 
what has happened. I don't blame them for not knowing. A lot of people 
in here don't know what is going on either, but there is no opportunity 
to intervene or even make the case.
  The independent legislature now turns into Nancy Pelosi and Harry 
Reid and the President. They could meet in a phone booth, the three of 
them, and make the decisions on where this country is going to go, to 
the dogs, if we let them. And that is what has happened to our 
independent legislature here. It is not accountable. The process has 
been subverted.
  That is just one thing. We have the institution of the media. They 
have the mainstream media. If you look at where they donate their money 
and how they register their vote, that institution has been taken over. 
The educational institution has been taken over. The list goes on and 
on.
  The rule of law doesn't mean so much any more, not when I arrived 
down on the border some time back and we happened to catch a drug 
smuggler that had about 450 pounds, excuse me, it was I think the 
number came to 218 or 220 pounds of marijuana under a false bed in his 
truck. It was 18 bales.
  It was under 250 pounds, because we weren't prosecuting people that 
had less than 250 pounds of marijuana when they came across our border 
to smuggle it into the United States. They since changed that and 
raised it up to 500 pounds because we didn't have enough resources to 
prosecute.
  The rule of law set aside? Another institution that is not respected 
universally, without question? And now the Director of Homeland 
Security, when there is a raid that is done for illegal employees that 
are working in an engine shop in Seattle, decides, well, I didn't know 
they were going to go in there and pick up those people illegally 
working, so I am going to investigate the investigators that are 
underneath her control. The rule of law suspended because there is a 
political equation involved in enforcing it?
  Institution after institution are under attack in this country too, 
and I think they understand that in the place I have been.
  The gentlelady from Minnesota.
  Mrs. BACHMANN. Thank you to the gentleman from Iowa for yielding.
  I think you are stating it very well. There is a strong, bold, 
philosophical divide. One has faith in the people, faith in the future, 
faith in the Constitution, faith in the pillars of American 
exceptionalism, the rule of law, the sanctity of the contract. Those 
are pillars of freedom that America was built on that caused our 
greatness, that gave us a pro-growth economy, that was the envy of the 
world.
  On the other side of the equation we have our brethren on the liberal 
side who have a completely different faith. Their faith is in the 
state. Their faith is in big government. They said this is the new era 
of big government. They have embraced socialism with both arms. They 
love socialism. They can't get enough of it.
  They want to make sure that the American people will have their fill 
of socialism, so much so today I had farmers in my office who told me 
just a few years ago crop insurance was 33 percent provided for by the 
State, just a few years ago. Today, 80 percent of all crop insurance is 
purchased through the Federal Government. Why? Because the Federal 
Government subsidizes that rate, and so they are crowding out private 
insurers for crops and they are becoming the new game in town.
  Just like what we saw the liberals do here in Congress with those who 
give out student loans. They didn't like the idea that private banks 
and companies offered and made student loans. No, that wasn't good 
enough. The liberals that run Congress wanted to make sure

[[Page H3050]]

that the government gives out student loans. Where is their faith? 
Their faith is in government.
  Now what do we see with health care? It just roils those liberals to 
have private health care and private pay of health care. They can't 
stand it. What do they want to make sure we have? They want to make 
sure we have socialized medicine, and as quick as possible, so quick 
that in this stimulus bill that you spoke of, Representative King, that 
not one person in Congress read before we voted on it, one hour of 
debate before we were forced to vote on this bill, we couldn't even ask 
questions hardly on this bill and we were forced to act on it.
  There is a rationing board, a Federal rationing board for Federal 
health care. Not only that, all Americans will have to have their 
health records, including their mental health records, all poured into 
one health record per person, and 600,000 entities, not people, 600,000 
entities will have access to every American's health records.
  This Congress, led by the liberals who have more faith in the state, 
more faith in government than in the American people, has decided that 
everyone's private health records will now be naked before the world; 
that 600,000 entities will now have access to every American's private 
health records, including chart notes from therapists if they go to see 
a mental health professional.
  That is the faith that we see from the liberals that run this 
Congress. That is the future that they have defined for Americans. That 
is not the future that I hear when I go back to the Sixth District of 
Minnesota. The great people in Minnesota, just like the great people in 
Iowa, are working pretty hard these days. They are pretty nervous these 
days. They have faith in themselves, in their fellow man. They go to 
their churches. They are praying. They are seeking relief. And they are 
concerned about what they are seeing come out of Washington, D.C.
  I just want the American people to know, there are a few of us here 
in Washington that still believe in American exceptionalism, that still 
believe in our Constitution, and that still believe in the greatness 
and the future of this country and that it lies in the hard work and 
innovation of the American people, and we are not going to give up that 
level of freedom.
  I yield back to the gentleman.
  Mr. KING of Iowa. I thank the gentlelady.
  I point out I had a conversation with an individual that represents a 
company domiciled in your State of Minnesota who, because of the 
language that was in the stimulus bill that no one knew was in there, 
it cost their company $25.3 million with the stroke of President 
Obama's pen just for the provisions on health care that were slipped 
into the stimulus bill. A $25.25.3 million check they have to write 
just to get themselves even with where they were the day before that 
bill came raining down from on high here with no amendments allowed. 
That is some of the things that are happening under the guise of 
stimulus.
  Now, if you need to stimulate the economy, one would think one could 
be restrained from slipping in this entire wish-list that has been an 
accumulation of a generation of liberal wishes, without a model of 
success, I might add, and with nothing to point to in history except 
failure after failure after failure. The discouragement of human 
endeavor is what comes out of the socialist approach. And yet the group 
that spoke before your group came to the floor and was advocated the 
Progressive Caucus, they put up two blue posters up over here, the 
Progressive Caucus.

                              {time}  2230

  So I found myself in my office. I ought to take a look and see what 
the Progressive Caucus really is. Well, I know how to find them. You go 
to dsausa.org. That's the Democratic Socialists of America, dsausa.org. 
They are the socialists. And they used to maintain the Web site for the 
Progressive Caucus until there got to be a little bit too much 
publicity, then they severed that relationship and the Progressive 
Caucus now manages their own out of the House here. But the connection 
goes back a long time. And you can go to that Web site, Democratic 
Socialists of America, and read, and the first thing they tell you is, 
we are not Communists. There's a difference between us. Communists 
believe that the state should own everything, including your dog. They 
didn't put that in there. But we, as Democratic Socialists, believe 
that, no, there should be some private property, and small businesses 
need to be able to run so they can be flexible enough to take care of 
the immediate needs of people like, I suppose, selling Polish dogs out 
here on the streets of Washington, DC. But big business--this is on the 
Web site. Big business should be run for the benefit of the people 
affected by it, which means they should be run by the customers. So if 
you have, let me say, a franchise chain of bars, they would be run by 
the drinkers. And if you have a company that makes bread, then it would 
be run by the people that eat the bread, not by the people that need to 
make a profit. It totally changes the reasons that we are in business. 
And it goes back to the idea that there can be central planning, 
central command, and somebody can manage an economy, instead of the 
invisible hand that makes it happen magically if you just let the 
market make the selections for you. That's their view.
  And on that Web site it says that they want to nationalize the oil 
industry in America, nationalize the refinery industry in America.
  Mrs. BACHMANN. And the gentleman knows that if you look at the living 
laboratory of history and economics of the last 100 years, you can see 
example after example of the Progressive Caucus, where their ideas have 
been implemented, and you can see the ramifications and the results of 
those ideas. They've resulted in millions of people's deaths by 
government and untold misery for generations. Where Russia was, for 
instance, trying to come out of its Soviet and its socialist domination 
to now, what the gentleman had just stated is a reverting right back to 
it.
  Tyranny, in human history, is the norm. Freedom is the exception. 
That's the oasis of America, the beauty of America, that throughout 
time, when tyranny has reigned supreme, the United States came out of 
the mist like a gem, like a midnight sun that came out of the darkness, 
and it has shone as a beautiful symbol of freedom for 230 years.
  And that's the question. Here we are now, 2009, will we continue to 
forge the link on the chain of freedom, or will this be the last link 
of freedom, and will the next one be broken, and will we revert back to 
tyranny? That's the question before us tonight, because what we are 
seeing is so historical, so profound that the United States has no way 
of continuing to look like a free country 10 years from now if we 
continue to implement just the concepts that we have seen implemented 
in the last 7 weeks.
  Mr. KING of Iowa. Reclaiming my time, I absolutely agree with the 
gentlelady from Minnesota (Mrs. Bachmann). And I would add that there's 
this line down through the middle of the aisle. When you turn to the 
left and you shift these policies towards the socialist side of the 
ledger, it always diminishes freedom. And when you shift them over on 
the conservative side of the ledger, it enhances their freedom over to 
where you get to the point where it goes on to the other side.
  Let me just say this, if you have no taxes and no regulation and 
laissez faire, then you have maximum opportunity for free enterprise. 
That's fine to do that if you have people who are a totally moral and 
ethical people. Now, that's the perfect model. But we have to have laws 
so we have to have restraint, and we have to have some taxation to 
enforce the law, and we have to have some taxation to fund our military 
and fund our security. And as Abe Lincoln said, the Federal 
Government's job should be to carry the mail, quasi private I will say, 
carry the mail, defend our shores, do for the people that which they 
cannot do for themselves, and leave us otherwise alone. That's freedom.
  But the other said is servitude in the end, capitulating our freedom 
for the sense of security that doesn't give the Wall Street much 
security to speak of. I think it's pretty clear as you've watched this 
downward spiral go on now, for all of these days since the election, 
and almost twice as much

[[Page H3051]]

percentage drop of the market as you've ever seen in modern history.
  The question of freedom vs. the question of dependency, with a 
socialist approach. And our urge needs to be this, our charge is this, 
our responsibility is this: We should be setting policies that maximize 
the average annual productivity of our citizens. If we do that, if 300 
million people turn out a little bit more, produce a little bit more, 
give a little bit more, decide they have the inspiration to earn, save 
and invest and build, if 300 million people do that even a little bit, 
if they do it 1 hour a day or 1 hour a week or 1 day a week, it adds to 
the entire GDP. And when that happens then it adds to the industrial 
base. It adds to the capital base. It adds to our innovation, and it 
automatically improves the quality of life, on average, of everybody in 
this country.
  Mrs. BACHMANN. And if the gentleman will yield, that's exactly what 
has happened in the United States for the last 10 to 15 years. We have 
seen dramatic increases in productivity that's added real wealth to the 
United States. Much of that can be attributed to the fact that we had 
tax cuts on capital gains and dividends. That may sound technical to 
talk about that, but the fact is, what are the real results that we 
have seen from that? We've seen real wealth creation enhancement, not 
just for those at the top of the economic spectrum, those at every 
level of the economic spectrum, and that's what we want. We want to see 
everyone succeed. We don't want to be about just punishing one aspect 
of American economic society. We want all people in the United States 
to succeed. We do that when we unleash American productivity. We don't 
do that when we punish the sector that will allow us to have growth and 
productivity.
  Mr. KING of Iowa. And reclaiming my time, that is the other side of 
the equation. The positive side of the equation is, let people earn all 
they want to earn, keep all that they want to keep, obviously pay their 
taxes when they make their purchases. If we do that, we've raised the 
productivity on average of America. But the policies that are coming 
from this Congress are diminishing incrementally and sometimes in huge 
increments the aspirations and the inspirations of the American worker, 
producer and entrepreneurs. It will lower the average annual 
productivity of Americans. You'll see the GDP at least proportionally 
diminish. That means that the hope for our children and grandchildren 
is less, not more. And we have to be willing to take some risk. We have 
to be willing to let some people fail.
  I've had to stare failure in the eye. I lived for 3\1/2\ years with a 
knot in my stomach that wouldn't go away because I didn't know whether 
I was going to be able to hold my business together or not during the 
farm crisis in the early 1980s. My bank closed April 26, Friday 
afternoon, 3:00, 1985. I'll never forget it. Red tag on the door. 
Highway Patrol guarding the door. It changed everybody's life that was 
in there, and it changed mine.
  I know what failure looks like. I've watched some of my neighbors, 
their spirit be eroded because they had to fight the finances.
  But the other side of that was, they had the opportunity of the, I 
don't want to say it's euphoric, but the good, strong, uplifting 
feeling of having built something that they can take pride in and 
having achieved and set an example for their children and their 
children's children, this example of a work ethic and integrity and 
giving your word and keeping your word and the value of contract, which 
I've made my living in the contracting business. And almost all of it 
on low-bid.
  And I've worked for many of my neighbors throughout the years, going 
clear back into the early 1970s. Most of those were verbal contracts, 
most of those we didn't bother to shake hands. That's not quite our 
culture to do that. As a matter of fact, if you shake hands 
with somebody they say oh, I'll come do that work for 5,000 bucks. When 
will you be there? Next Friday. Okay. That's fine. If you shake hands, 
he'd be thinking, you must not trust me then; you're going to make me 
shake hands on it. Our word's our bond. The handshake is almost like a 
written contract. And I've only had one of those written contracts 
between my neighbors in all of those years.

  But I know the value of a contract. And you've got to keep your word 
and not break your word.
  Mrs. BACHMANN. If the gentleman would yield. Imagine what your 
business would have been like had a judge been able to come in and open 
up that contract that you had with a purchaser of your product and of 
your service, and let's say your margin, your profit was maybe 2 
percent or 6 percent. And you have a judge come in and alter those 
terms, let's say, to 10 percent. What happens to your margin? It's 
gone. You're not only working for free, you're paying that person to 
work for them.
  That's what we saw happen today on the floor of this body. We saw 
contracts opened so that any margin that people were making, it's gone. 
It's gone. And so, what we're doing is we're violating that pillar of 
American exceptionalism which is the sanctity of the contract, and the 
pillar of freedom that says that we will keep contracts inviolate, and 
we will observe the rule of law.
  What do people trust in? Why would people make a contract in the 
future? What business would do that? Because now this Congress has set 
a standard that says, no longer will your word be your bond.
  Mr. KING of Iowa. Reclaiming my time. I'd just give an illustration 
of how that works. And I've had to make that decision a number of times 
in my business life because there are some areas that are quasi-
sovereign. And I won't describe them any beyond that. They're quasi-
sovereign, which means that there's really not relief to go and make a 
collection in their jurisdiction. So I've had to go in there and bid 
work, and I would calculate the materials, expenses, a little margin 
for profit and the insurance and those things, build that all together, 
and then I'd have to put a factor in and there's no place for me to go 
to get relief here except to the very people I'm doing business with. 
And some of you will know the quasi-sovereign regions I'm talking 
about. So I had to, and all my competitors had to also factor in a risk 
factor for what happens if the deal gets changed afterwards. I've done 
that on Excel spread sheets with numerous bid items and put a 
multiplier on each one of them that just simply was the number that 
evaluated the risk factor on whether they would change the deal after 
the fact because, in that quasi-sovereign region I couldn't count on 
the sanctity of the contract.
  It's real clear to me there's a risk factor that will be factored in 
to any future mortgages that we have under this cramdown legislation. 
There will be higher down payments required because that will minimize 
the risk to the lenders, and there will be higher interest required 
that will minimize, and that means everybody pays it. Everybody digs in 
for the down payment, especially for their first home. And also, the 
higher interest rate that everyone will have to pay.
  And meanwhile, we're going to reward people that openly committed 
fraud or misrepresentation or false pretenses because this Congress 
refused to accept that language, even though the Judiciary Committee 
passed that language out 21-3, changed the deal after the fact.
  I thought we had a contract in the Judiciary Committee. That contract 
has been torn asunder. The sanctity of that contract is gone. I guess I 
shouldn't be surprised if the members of the party and the committee 
would come to this floor and vote for a cramdown legislation that would 
tear the contract of the mortgage asunder just as well.
  Mrs. BACHMANN. You know, it was just last week that the Wall Street 
Journal reported the estimate that the premium would be an additional 2 
percent on a mortgage. That's what the cost would be if this cramdown 
legislation goes through. So if someone qualifies for a 6 percent 
mortgage, now they would be looking at an 8 percent mortgage. What that 
does is it takes scores of people out of being able to qualify for a 
mortgage, just adding to the cost. And for what?
  Over 92 percent of all Americans are responsible. They're working. 
They're paying their mortgages on time. And when you look at the 
trillions and trillions and trillions of dollars that have been thrown 
at this housing problem,

[[Page H3052]]

and you have 92 percent of Americans paying their mortgages on time, 
when you look at these tens of trillions of dollars now that are being 
thrown at this, I think we could probably be paying those mortgages 
off, multiple times, of the people who were in trouble. It is so much 
money. It is so unfathomable. I think that's why you see the American 
people running scared right now, because they aren't getting certainty 
out of Washington, D.C. What they're getting is uncertainty. And we 
have a completely different message. We have a message meaning 
fairness. We have a message of hope, where we can turn the economy 
around. We've done it before. We can do it again. We cut people's 
capital gains tax, we cut the corporate business tax. We cut their 
marginal tax.
  Why do we do all that? Because we want simplicity and we want 
fairness for people in the tax code. Everybody should have to pay 
something. But it needs to be fair.
  The SPEAKER pro tempore (Mr. Childers). The time of the gentleman has 
expired.
  Mr. KING of Iowa. Reclaiming the balance of my time and yielding it 
back to the Speaker, I thank you for your indulgence.

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