[Congressional Record Volume 156, Number 61 (Wednesday, April 28, 2010)]
[House]
[Pages H3006-H3012]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       ECONOMIC CRISIS IN AMERICA

  The SPEAKER pro tempore. The gentleman may resume.
  Mr. KING of Iowa. I am always happy to yield when the Rules Committee 
is conducting business here on the floor.
  So I will go back to the beginning, Mr. Speaker, and that is this: 
that if we would go to 1978--and I want to illustrate the chronology of 
how we got to where we are today financially. Excuse me, Mr. Speaker, I 
will take it back even further than that. Let's go back to October of 
1929 when the stock market crashed and it launched the Great Depression 
rather than the Great Recession. We saw a downward spiral in the value 
of that Dow Jones Stock Exchange and the other shares that were not 
registered on the Dow at the time, or as part of the Dow Jones 
Industrial Average, and Americans lost equity. Some jumped out of 
windows--actually, not nearly as many as history would have us 
believe--but that crash in the stock market precipitously dropped. Of 
course it came up and went down, and it's always been a sawtooth.
  But we went through the thirties. We saw Franklin Delano Roosevelt 
being elected in 1932. And actually, prior to that, but certainly 
accelerated from that point, he borrowed money and spent money and 
created make-work projects, and he put the United States in debt like 
never before and never envisioned by the Founding Fathers. Even his own 
people, including John Maynard Keynes, got nervous with the amount of 
money that was spent. His Treasurer, Morgenthau, expressed his concern 
that we spent all this money and what do we have to show for it. 
Unemployment is still high; the economy still hasn't recovered. And 
they lumbered all the way through the thirties with marginal 
improvement in the economy.
  And one has to question if it ever would have recovered if it hadn't 
been for World War II. In fact, the President of the United States, the 
current President, has made the remark that World War II was the 
largest stimulus plan ever. He can make that statement and challenge it 
or not, I don't take issue with the concept that he is illustrating in 
that point, Mr. Speaker.
  But I would continue and make this point, that from October of 1929 
we saw all of this spending in the New Deal era of the Great Depression 
throughout the thirties. We saw all the borrowed money that went into 
winning World War II, and it's a good thing that we did. I believe 
Franklin Delano Roosevelt was an outstanding war leader for the better 
part of the Second World War, not so much of an economic leader, in my 
view, nor a social and cultural one; but he did hold us together as a 
Nation and he provided that clear voice and that leadership that was so 
important during that period of time, and he stood on the ground of 
unconditional surrender. So I tip my hat to that contribution to 
history to that man.
  However, by the end of World War II, we had not recovered 
economically from where we were in 1929. And by the beginning of the 
Korean War--let me say by the beginning of the Cold War in 1948, as it 
was illustrated by Winston Churchill--we had not recovered from the 
Great Depression. By the beginning of the Korean War, we had not yet 
recovered from the Great Depression. And by the end of the Korean War, 
we had still not yet recovered from the Great Depression. If you 
measure it as the Dow Jones Industrial Average recovering back to the 
place where it was in October of 1929, that happened, Mr. Speaker, 9 
years after Franklin Delano Roosevelt had passed away. It was 1954 when 
the stock market got back to where it was in October of 1929. All of 
those years.
  And I will argue, Mr. Speaker, that overspending by government, the 
interest and the principal overspending by government delays the 
recovery. It may diminish the depths to which we might have otherwise 
fallen, but it delays the recovery.
  It's the same as in a business. Let's say, for example, you're a 
small business and you're grossing $500,000 a year and meeting a 
payroll and all the bills that I talked about earlier and you have a 
flood that wipes out your asset base. Then along comes FEMA, and if 
you're in business, they're not going to give you a grant; they might 
help you get an SBA loan. So if there's a disaster loan, it might even 
be a preferable interest rate, but let's say your debt was $100,000 and 
you're grossing $500,000 and meeting a payroll of $250,000 a year. Now, 
it takes another $400,000 to put all the pieces back in your business, 
and you're able to borrow that money at 4 percent or 5 or 6 percent.
  Now you have the interest rate on the $400,000, plus the requirement 
to pay the principal off on that $400,000. All of that money that 
you're spending now that is the result of the over-leveraging that may 
be necessary to keep you in business is money that's earned, it's money 
that you had to earn, you would have earned it anyway, but now that 
money goes off for interest and principal rather than capital 
investment, which is what creates jobs.

                              {time}  1830

  At a certain point, you can't service the debt any longer. At a 
certain point, a business can't pay the interest; it can't pay the 
principal, and it becomes insolvent if the debt and the leverage is too 
high. That is true for a family that runs their credit card bills up 
too much to where they can't service even the interest or the minimum 
payments on their credit cards. It's true also for a small business. 
It's true for a large business--and, Mr. Speaker, it's true for a 
government. It's true for a small government like Greece. It's true for 
a large government like the United States of America. At some point, 
this

[[Page H3007]]

debt that we have taken on here in this time, in this era, becomes too 
great for even the most robust economy in the world to overcome--to 
service, to pay the interest, and to pay the principal on that debt.
  That's where I think we are headed. We may already be there.
  That was the fear that they had during the thirties, and that was 
something that may have restrained Roosevelt in his spending to where 
we were able to recover from it; although, it took a long, long time--
from 1929 until 1954, until 9 years after the Second World War was over 
and 9 years after Franklin Delano Roosevelt passed away. We carried 
this burden throughout this whole period of time.
  Through the fifties, during those idyllic years of Fun with Dick and 
Jane, which is the life that I grew up in, we were responsible for our 
budgets. The people who were coming into adulthood at that period of 
time had now cut their economic teeth on fiscal responsibility because 
they had pinched pennies and had made it through the Great Depression. 
Then they fought and won a world war. Then they were engaged in a Cold 
War. Of course, we had the war in Korea that was a negotiated 
settlement in the end. These were a frugal, hardened people who were 
the sons and daughters, in my part of the country, of pioneers who came 
across the prairie in a covered wagon--generally walking beside the 
team of oxen, not riding in the wagon--to live free or die on the 
prairie. These were independent, hardworking, industrious, 
entrepreneurial spirited, strong faith family people who took advantage 
of the opportunity to be legally here in America, to build lives for 
themselves and to lay the foundation for their children and their 
grandchildren. These were the people in the fifties.
  Now we watch the next generation, the baby boomer generation, blossom 
with the component of the generation which was referred to as the 
``flower children,'' who didn't take that responsibility, who weren't 
hardened by those experiences, which were only the secondhand 
experiences of what had been transferred from their parents to them, 
and they began to push this irresponsibility.
  By 1978, the class envy component got high enough, and there were 
some things that were inappropriate in what was going on, but the 
lending institutions were redlining neighborhoods. They would look at 
the inner cities in America that were losing asset value. Now think of 
this: If you owned an apartment--a ``condominium'' is how we refer to 
it today--or a house or a piece of industrial or commercial property in 
an inner city that was being run down, the value of the real estate was 
diminished sometimes by the crime rates that were there, by the abusive 
drugs, by the businesses that weren't sustaining their value and their 
cash flows. So you might have a nice home in a neighborhood that's not 
as nice as it used to be. Even though you keep your home up, people 
don't want to buy that home because they don't want to move into that 
neighborhood, so the value is going down.
  The bankers and the lenders were doing what they call ``redlining.'' 
I have a red pen in my hand. They would draw, Mr. Speaker, a line 
around this neighborhood or this area in the city, and they would make 
a determination that they were no longer going to lend money on real 
estate in those neighborhoods or in those commercial industrial 
property areas that were being run down.
  It may well have been a prudent business decision. It was defined as 
a racist decision, and in some cases, I think it probably was. This 
Congress passed legislation called the Community Reinvestment Act. It 
compelled lenders to make bad loans in bad neighborhoods. That was in 
1978. ACORN was formed and shaped around that same period of time.
  As this moved forward into the 1990s, under the Clinton 
administration, there was a refreshment of the Community Reinvestment 
Act that set yet higher standards for making more bad loans into bad 
neighborhoods. They had found that Fannie Mae and Freddie Mac had 
become quasi-government entities for formerly private entities who were 
not making, according to the opinion of this Democrat majority in this 
Congress, enough bad loans into bad neighborhoods. So they changed the 
standards in the Community Reinvestment Act. They were lobbied by ACORN 
to lower the standards for Fannie Mae and Freddie Mac. They lowered the 
standards for Fannie Mae and Freddie Mac for the secondary loan market 
so that more lenders could make more bad loans in more bad 
neighborhoods and could peddle them off into the secondary loan market 
of Fannie Mae and Freddie Mac.
  Now we are into the mid-1990s, and still it wasn't such a crisis 
until such time as the dot-com bubble burst. The dot-com bubble burst, 
I think, was initiated by the lawsuits against Microsoft that were 
joined by several State attorneys general, including by my State 
attorney general, Tom Miller. I think that he and others wielded the 
lance that pierced the dot-com bubble when they filed the class-action 
lawsuit against Bill Gates' operation and Microsoft. Even though I 
believe that that bubble was swelling and that it would have burst at 
some point, I think the lance that was wielded was by those State 
attorneys general. That brought about the bursting of the dot-com 
bubble.
  In the aftermath of the bursting of the dot-com bubble, we had, I'll 
say, a mini recession. Alan Greenspan saw that mini recession. Mr. 
Speaker, this is my interpretation of his actions. Certainly, this is 
subject to rebuttal by Alan Greenspan or by somebody else who may have 
some knowledge that I'm not privy to. He set about a policy here in the 
United States to unnaturally lower the interest rates so that more 
people could buy homes in order to drive the housing market. This was 
to partially compensate for the bursting of the dot-com bubble. We had 
more homes built than before, a higher demand because of the 
unnaturally low interest rates and favorable terms, and we had the 
lower underwriting standards that had been provided to Fannie Mae and 
Freddie Mac as far as their secondary mortgages were concerned.
  There was pressure that was put on the lenders. They had been pushed 
by ACORN, which found itself in the inner-city neighborhoods brokering 
home loans and approving the conduct of the lenders as to whether they 
were complying with the Community Reinvestment Act.
  So we have a political organization that has turned out to be a 
corrupt criminal enterprise, promoting bad loans in bad neighborhoods 
at unnaturally low interest rates, driving up a false economy in the 
housing market to, presumably to some degree, compensate for the 
bursting of the dot-com bubble that was brought about by the suits of 
the States' attorneys general, including by my attorney general, Tom 
Miller.

  While all of that was going on, we got hit by the September 11 attack 
on our financial centers. There were the ensuing extra costs involved, 
and there was a tremendous loss in life and in treasure that took place 
due to that. Then what do we see happening here?
  We have seen now an economic crisis that has been, perhaps, averted, 
but maybe it would have been better if we would have simply allowed 
some of those businesses that were too big to fail to just simply fail. 
We'd have reorganized them, and we would have put them through the 
process to get them back into the system again. We would have recovered 
more quickly. It may have hurt more, but in the end, we would have 
reestablished the principle that you simply cannot have ``too big to 
fail'' unless you are going to have a government guarantee. Now the 
government guarantee on Fannie and Freddie is $5.5 trillion in 
contingent liabilities. All of this has taken place, and it has moved 
us away from those standards of free enterprise and accountability.
  I would be very happy to yield so much time as she may consume to the 
gentlewoman from Minnesota, who is on the Financial Services Committee 
and who is extremely knowledgeable about this and about any subject 
that she might choose to change it to.
  Mrs. BACHMANN. I thank the gentleman from Iowa for laying out the 
history of where we are today in terms of the financial problem.
  Really, the concern that I have on the bill that is being debated 
over on the Senate side right now is that it seems that this bill 
effectively wants to institutionalize the very bad government 
interventionist policies that got

[[Page H3008]]

us to the point at which we are now. Here are just a couple of things 
that this bill will do over on the Senate side:
  Number one, it makes bailouts permanent. It's as though we had 
bailout 1.0, which no one really liked. It was a $700 billion bailout. 
I know Congressman King and I both voted against the original $700 
billion bailout, but it would institutionalize and make permanent the 
bailouts.
  This is something that is not generally known: With the first 
bailout--and it was under President Bush, unfortunately, that the first 
bailout was passed--the President had to come to Congress and ask us 
for our permission for the $700 billion fund to be created. Now, 
remember, this never had happened in the history of the United States 
whereby the Secretary of the Treasury was given a blank check for $700 
billion. The Treasury Secretary virtually was able to do whatever he 
wanted to do with that $700 billion, and he had, effectively, no 
oversight from Congress. He got a blank check for $700 billion.
  In good conscience, I could not give that kind of money to one single 
individual, because, if you give that sum of money, which had never 
before been given to any individual in American history, you know there 
is going to be waste; you know there is going to be fraud; you know 
there is going to be abuse. That is something that government tends to 
do when it spends too much money. So, of course, that's what we saw. We 
saw that the money went all over the place, and we still don't have a 
full accounting of where all of the TARP money is.
  Yet what did that money fund? Think of it.
  That money allowed the United States to purchase the largest banks in 
this country, and the United States Federal Government still owns those 
private banks--Citibank and Bank of America. That money also allowed 
the Federal Government to buy AIG, the largest insurance company in 
America.
  Barack Obama, who is now our President, was elected in November of 
2008. Shortly after his election, he went to then-President George Bush 
and said, President Bush, I would like to have something under $20 
billion. I want to set up an automobile task force because, if we don't 
spend money now, Chrysler and GM could fail, and to prevent their 
failure and to prevent job loss, we need to have an automobile task 
force fund.
  President Bush was on his way out the door. He was ending his 
Presidency. President Obama was about to begin his. He gave that amount 
of money over to President Obama and to his team to set up the 
automobile task force. We all know what happened. The automobile task 
force was set up. Literally, billions of dollars were pumped into 
Chrysler and GM.
  What happened?
  Chrysler filed bankruptcy. GM filed bankruptcy. In fact, it was so 
bad that GM stock was taken off of the New York Stock Exchange because 
the value of their stock plummeted so far. So, contrary to what 
President Obama said as to his being able to save the car companies 
with this bailout fund, the car companies went under. They failed.
  As a matter of fact, President Obama then decided--I don't know where 
he got the power from--to fire the head of GM. Out of what power? No 
one knows. So here you have the President of the United States deciding 
that a CEO of a company is going to be fired. That is a jurisdictional 
issue. The President of the United States does not have the power to 
fire anyone in the private sector, but isn't it amazing what a whole 
lot of money will do for a person. That money put so much power into 
one man's hands that he was able to do virtually anything he wanted, 
including overturning about 150 years of bankruptcy law.
  How was that? Because Chrysler bondholders, who are the people who 
invested money into the Chrysler car company, had an investment.
  Let's say you put $100 into a company that your friend holds. That's 
your money that you put in. Then the company gives you a bond. It says, 
Hey, if anything happens to our company, we'll make sure that your $100 
is paid back first before anyone else is paid back, and we'll pay you 
back all of your $100.
  Well, unfortunately, President Obama and his team decided to turn 
upside down 150 years of bankruptcy law. What they did is they said, 
You bondholders who have a secured interest in your investment are no 
longer getting your secured investment. We are taking your money, and 
we are giving it to well-connected political people. We want to make 
sure they get that money. In that case, those people were their friends 
at the UAW, at the unions.
  Mr. KING of Iowa. Will the gentlelady yield?
  Mrs. BACHMANN. Yes.
  Mr. KING of Iowa. I thank the gentlelady.
  In reclaiming my time, I wanted to explore this ``secured creditor'' 
so that the Speaker and those who are observing will understand clearly 
what this means. A ``secured creditor'' would be someone who holds 
collateral, which is a guaranty that's behind the bond.
  I'm going to ask you to flesh this out a little bit, but I'm going to 
say that it includes, perhaps, real property, which could be the actual 
factory, itself. It could be the equipment inside the factory. It could 
be cash collateral, security. It could be the cars sitting as ready for 
shipment to the dealers but not the cars in the dealers' lots, because 
they own those cars.
  Is that a reasonable picture of what ``secured collateral'' is when 
you talk about bondholders and the secured creditors?
  I would yield to the gentlelady.
  Mrs. BACHMANN. That's right, and there is something else to know on 
secured creditors.
  Usually, secured creditors take a lower interest rate. They get paid 
back at a lower rate because they are first in line. When Chrysler went 
under, what happened is that, rather than making the bondholders whole 
first, they actually had their secured interests taken away from them, 
and other creditors were made whole first.

                              {time}  1845

  How can you do that? That's an abrogation of contract law; an 
abrogation of bankruptcy law. And so we saw a violation of law. That's 
something that is foundational to the United States that gives us a 
good business climate. The rule of law is a good thing. The sanctity of 
contracts works. When we start violating the law and when we start 
penetrating contracts and violating contracts, that's when we get into 
trouble with our business climate. We saw that happen in this bailout.
  Not only did the Federal Government take money that we don't have. 
Remember, we had to borrow money. So this wasn't money that we had 
sitting in a bank vault here in Washington, D.C., where we opened up 
the bank vault and we pulled out big wads of $700 billion that we could 
give to the Treasury Secretary to give out to whatever his favorite 
private business was or his favorite group was. No. We had to borrow 
that money from the Chinese or whoever we could go and sell our debt 
to. And so who's going to pay that back? That money is going to be paid 
back by the debt-paying generation. That gets us into a whole 'nother 
area.
  The gentleman was talking about the financial mess we're in. You were 
talking about ACORN. You were talking about the subprime mortgages, 
where all of that's gone, Freddie and Fannie. And the point I guess 
that I'm trying to make is that the Federal Government with this TARP 
bailout ended up taking that money and, rather than making our economy 
whole, rather than creating jobs, because, remember, President Obama 
said, again, this is with the stimulus spending, $787 worth of stimulus 
spending, we were promised that we wouldn't see unemployment go above 8 
percent, and we were promised that he would create 3\1/2\ million jobs.
  I know my colleague Steve King knows that rather than creating 3\1/2\ 
million jobs, we lost 3\1/2\ million jobs. So the spread of error for 
President Obama is about 7 million jobs, let alone the fact that the 
debt-paying generation that will pay back the $787 billion, those today 
that are age 5 to age 30, that age cohort for the next 45 years of 
their work history will have to pay back the same amount of money as if 
they went to the store and bought an iPod for $300. So the 5- to 30-
year-olds for the next 45 years of their work life will have to go down 
to a store, buy an iPod, at the end of the month crush the iPod under 
their heel; then buy another one the next month, crush it; buy one the 
next month. Every month for 45 years of work history, the debt-paying 
generation in America will have to

[[Page H3009]]

effectively buy an iPod and crush it and then replace it to equal what 
will be spent in this stimulus bill. That's just one of the egregious 
spending bills.
  And when I think of the debt-paying generation, the 5- to 30-year-
olds are saving up and would love to buy an iPod, just own one. But now 
they're condemned to, for 45 years of their life every month, going out 
and buying a brand new iPod and effectively giving it over to the 
Federal Government.
  Mr. KING of Iowa. Reclaiming my time, I would add onto that that I 
hadn't thought of that in terms of, and this is a presumption that 
iPods will stay the price they are, which we know that competition and 
mass production will probably reduce the cost. But under current value 
and current dollars, a child born today, for being a natural-born 
American citizen, their share of the national debt is $44,000. That's 
like here's your mortgage, sign here with your little ink footprint 
when you're born, we'll wheel you right out of the delivery room and 
you've got a $44,000 debt that you have to pay the interest and the 
principal on. That same child born today, by the time they start fifth 
grade in school, their share of the national debt will be $88,000. 
That's the difference between the Obama budget and the budget that we 
had coming into the Obama administration. That's that kind of a burden 
that I'm going to presume cross-references to the $300 a month that the 
gentlelady from Minnesota has talked about.
  Mrs. BACHMANN. Also, remember, that's if every American is paying 
taxes and paying the debt. But one thing that we saw from this current 
filing of income tax is that 47 percent of Americans paid no taxes. 
Now, that doesn't mean that 47 percent of Americans are deadbeats, 
because they aren't. Many Americans don't have income because they're 
senior citizens living off of fixed assets. There are a number of 
reasons. But still the number remains true, that 47 percent of 
Americans aren't paying the taxes. An increasingly smaller group of 
people are paying a larger share of the taxes. And so the debt burden 
on particular Americans will be especially egregious.
  Mr. KING of Iowa. One of the important studies was done not that long 
ago by Robert Rector of the Heritage Foundation. He's done a couple of 
very important studies in the last 2 years. One of them was the level 
of welfare that's here in the country. I believe he counted 72 
different programs that distribute the wealth from taxpayers in America 
to people who are sometimes taxpayers but more often a greater share of 
them are tax users. Of those programs, even though we brought down some 
of the welfare in the mid nineties, it didn't really reduce it so much 
as it produced a temporary plateau; and then it was built up again with 
a whole series of programs that we can't track.
  Well, he has done so. And it's a chilling thing to see what happens 
to a society that was a meritocracy, that rewarded people for their 
work, that now has become a welfare state.
  One of his definitive studies, Mr. Speaker, was this. He went in and 
looked at households that are headed by high school dropouts, without 
regard to their immigration status; whether they were legal, illegal, 
foreign or natural-born Americans, whatever their category might have 
been with their immigration status, if they headed households, and the 
average household, a family of four, and they were a high school 
dropout, they would draw down an average of $32,000 a year in taxes in 
the whole collection of the benefits that are there and they would pay 
about $9,000 a year in taxes. They would draw down 32, they would pay 
about $9,000 a year in taxes. The net cost to the taxpayer was $22,449 
a year, and that's an average, and the average sustained life of that 
household, Mr. Rector calculated, was 50 years.
  So the math comes out to about $1.5 million to subsidize that 
household. And we've got people here in this country that are arguing 
that we need to open up our borders and bring in any number of people 
because our economy needs this labor and we need someone to pay for the 
Social Security of the baby boomers. Well, if they can't sustain 
themselves here, if they're undereducated, even though we have 
entrepreneurs that fit that category, that are going to make millions 
of dollars and create millions of jobs, on average it is a net cost to 
the taxpayer of $22,449 a year, $1.5 million for the duration of that 
household, that's a burden on the taxpayers that is not a stimulation 
to the economy, it's a drag and a drain on the economy. And the 
argument that they are paying Social Security with the payroll tax and, 
therefore, that's good for those of us that are looking at retirement, 
members of the baby boom generation, which I am and Mrs. Bachmann is 
not. That's my little pandering piece here, Mr. Speaker.
  Mrs. BACHMANN. If I could just add with Robert Rector from the 
Heritage Foundation, he also did a study on welfare and increasing use 
of welfare in the United States. The trajectory that we're on with the 
growth in welfare is also unsustainable. And we also recall that 
shortly after President Obama came into office, one thing that he did 
is he rescinded all of the welfare reform regulations that were put 
into place by the Republican Congress after they won control in 1994. 
So all of the reforms that actually got people off of welfare and into 
working jobs and actually plateaued the cost of the welfare, now all of 
those restraints have been taken off. We're seeing a dramatic increase 
in the trajectory in welfare spending.

  But something else that was interesting from Robert Rector, he said 
that if an individual on the full panoply of welfare benefits leaves 
welfare, that that individual would have to seek a job paying in excess 
of $44,000 a year to replace the welfare benefits that they're 
receiving from the Federal Government. That is the level of generosity 
of the welfare benefits that are currently available to people in the 
United States. There are people in my district that would love to be 
making an income of $44,000 a year. And yet that is what the United 
States is providing on average for welfare benefits across the United 
States. Of course there are exceptions to that, but that's on average. 
Again I would refer people, Mr. Speaker, to the heritage Web site and 
the work is by Robert Rector.
  Mr. KING of Iowa. Reclaiming my time, I appreciate the gentlelady 
refreshing that point. I had actually forgotten that number. I remember 
it now when you say it. $44,000. And now I think in terms of, if you 
have all the free time in the world to do whatever it is you want to do 
and you have rent subsidy and heat subsidy and food stamps and the 
refundable child care credit and the earned income tax credit.
  Mrs. BACHMANN. And you've got a home mortgage, a home mortgage that 
is subsidized by the taxpayers. Because, remember, this was a part of 
the problem with the amendments to the Community Reinvestment Act in 
the 1990s, and it was this: An individual could have no income, no 
assets, no job. With all of that, you could still get a mortgage just 
based on your welfare benefits. This was a complete change in the way 
mortgages were given out. And welfare is inherently unstable.
  So to think that a 30-year mortgage is being given to someone on the 
basis of their welfare payments. We had never done that before in the 
United States. And so what we saw is a correlation with a very high 
rate of foreclosure. What inducement or incentive is there for an 
individual to save up to buy a house, save up for a down payment, be 
frugal, do what you need to do to have a good credit score to get into 
a house when if in fact because of the Community Reinvestment Act, 
banks were forced to not look at credit scores essentially and to give 
mortgages to people on the basis of their welfare checks?
  And a lot of these mortgages that were given would give cash back to 
people. Then people went out and took home equity loans against their 
home and they had virtually nothing in the home. No wonder we're in the 
problem we're in. If you change your banking standards to ones that 
don't even rank up with a comic strip level of regulations, you're 
going to get disastrous results. That's what we're in the middle of 
living with now.
  Unfortunately the bill that's going through the Senate is 
institutionalizing the worst aspects that there are about government 
policy that led to the financial meltdown.
  Mr. KING of Iowa. Reclaiming my time, I think it might be useful for 
the gentlelady and I to go through this list

[[Page H3010]]

of things that have happened about the nationalization. Because if I 
look at the dialogue in the country, we've carried this dialogue, I 
think, back and forth together and teamed up on it.
  The gentlelady has talked about $700 billion in TARP. We haven't 
brought it up so much, but it is part of this, that three large 
investment banks were nationalized, either by action of or the support 
and approval of President Obama; along with AIG, the large insurance 
company, for some amount around $180 billion. We might have used $185 
billion at one time. It's in that area. Then we've seen Fannie Mae and 
Freddie Mac, which I did mention earlier. The President by his 
executive order has swallowed up the balance of the risk, put it on the 
taxpayers, to the tune of $5.5 trillion in the contingent liability 
should Fannie and Freddie, either combination of them, collapse.
  While that's going on, we watched the nationalization, the takeover, 
of two of our proud American car companies: General Motors and 
Chrysler. We saw the CEO of General Motors fired and replaced by a CEO 
that was essentially de facto hired by the President of the United 
States. We've seen all but two of the board of directors of General 
Motors put in place by the President of the United States who doesn't 
even deny it. He takes a little bow and a smile as if that's what we 
should be doing with government.
  We have them looking in at CEOs' pay. We look at the student loan 
program that's been taken over by the Federal Government. We've watched 
the nationalization of our skin and everything inside it with ObamaCare 
taken over by the Federal Government. Now we're watching the financial 
institutions all the way down to the smallest credit transaction will 
be looked over by the Federal Government. This is a chilling display of 
the continuum of history of the last 18 months.
  Mrs. BACHMANN. What we have witnessed in the last 18 months is 
effectively an economic coup. Because as you have correctly stated with 
Fannie and Freddie, today the Federal Government owns over 50 percent 
of all private home mortgages in this country. So over 50 percent of 
the homes, they aren't owned by the people occupying them paying the 
mortgage. It's really owned by the Federal Government. Not only that, 
for anyone going to secure a mortgage today for a home, nine times out 
of 10 they have to go to the Federal Government to get their mortgage. 
So that number will swell for the number of homes that are owned by the 
Federal Government.
  According to an economist from Arizona State University, if you add 
up all of those sectors of the private economy, we've gone from, 18 
months ago, 100 percent of the private economy, private, now we have 
over 51 percent of the private economy effectively directly owned or 
controlled by the Federal Government.
  But President Obama isn't done. He is demanding that the Federal 
Government effectively control the energy industry. That's another 8 
percent of the economy. He also wants to have the Federal Government 
control the financial services industry. Some people calculate that at 
15 percent. So that would take us from 51, an additional 8 with cap and 
trade, to 59 percent. Then if we add the financial services sector on, 
that would take us then up to 74 percent.
  President Obama hasn't even been in office 18 months, and we're 
already at the point where we could be at effectively nearly three-
fourths of the private economy under the thumb of Uncle Sam, which is 
why we absolutely have no choice. This fall we have to see 
constitutional conservatives retake both the House and the Senate, and 
then 2 years from now we need a President who will be a constitutional 
conservative President so we can repeal the government takeover of 
health care and truly unwind the Federal Government getting out of 
owning or controlling private businesses.

                              {time}  1900

  We have no choice, because otherwise we will go the way of the rest 
of the world. And all we have to do is take a page out of Greece. 
Greece is effectively a bankrupt country that's being bailed out by the 
European Union. Because of the bailouts that the European Union is 
giving to Greece, the Euro is dropping in value.
  The same thing with the United States. We can't think that just 
because we have been the greatest power and the greatest Nation the 
world has ever known that we will always continue that way. If we 
change our economic policies so they have more in line with left of 
socialist nations, if that's our economic policy that we are embracing, 
then should we be surprised if the result is analogous to that of 
countries that are left of socialist-embracing economies? That's not 
who we are. It's not our character as a people.
  And I think it would shock the American people to realize, Mr. 
Speaker, that today the Federal Government owns or controls 51 percent 
of the private economy. That cannot be. And I know Congressman King 
joins me in putting his marker in the ground, saying that on his watch 
in Congress he will do everything he can, as I will do everything I 
can, to get the Federal Government in its proper realm of 
jurisdictional authority.
  The government doesn't have sovereignty over private business. Only 
private business has sovereignty over private business.
  Mr. KING of Iowa. And reclaiming my time, I do wish to join in that 
pledge and putting my marker here. We have joined together in the 
introduction of legislation to repeal ObamaCare, to pull it out root 
and branch, lock, stock, and barrel, to eliminate ObamaCare so there is 
not one vestige of ObamaCare DNA left behind that could reproduce 
itself and further poison our legislation and our laws in America and 
further diminish the vitality of the American people.
  I recall that President Obama as a candidate consistently was 
critical of President Bush for not having an exit strategy in Iraq. He 
pounded on President Bush for not having an exit strategy in Iraq. 
However, that exit strategy actually is being implemented, ironically 
by the very individual who was so critical.
  My point is that Barack Obama has been involved in the 
nationalization of these huge sections of our private sector, as the 
gentlelady has described, more than 51 percent of our private sector 
activity. And when we add the financial sector to it, it becomes a 
number that approaches that three-quarters, as she has said.
  I sent a letter to Secretary Geithner, a formal letter. The response 
needed to be under oath because it was within a hearing of Financial 
Services and Ag hearing that we did jointly. The question was if the 
President was elected at least in part because he was critical of 
President Bush for not having an exit strategy in Iraq, what's 
President Obama's exit strategy to divest the taxpayers of their 
invested interest in this whole list of private entities that we have 
talked about from the banks to AIG to Fannie and Freddie to the car 
companies? I didn't get to the point of the student loan or ObamaCare 
because that hadn't been nationalized yet at that point.
  Two months later I did get an answer. And it took a couple of days 
for the smartest lawyers I had to analyze all the language, which boils 
down to this: The response from Secretary of the Treasury Geithner, 
well, we will divest ourselves of these assets when the time is right. 
And only he would know when that was. But there was no criteria for the 
Federal Government getting out of this business.
  It appears that there is a powerful incentive that is driven within 
the White House and within the progressives, the very liberals in this 
Congress, of which there are at least 77, to continue the 
nationalization, the management now that they are seeking to do of 
managing all of our financial industry, taking over student loans, and 
now every credit account in America. And additionally to that, I would 
give a new example that was exposed to me the other day.
  We have an example of how the Federal Government takes over the 
insurance industry. They did so in about 1963 or 1964 with the Federal 
flood insurance program. They argued that the private sector didn't 
produce enough competition so that you couldn't buy flood insurance in 
flood plains. Maybe there was a reason for that, because you would be 
flooded and the risks were too high. So they set up the Federal flood 
insurance program to provide competition to the private sector that was 
property and casualty at the time.
  In a few years, it came to pass that--and it is true today--that the 
only

[[Page H3011]]

flood insurance that you can buy in America is under the Federal flood 
insurance program. It's also true today that that program is $19.2 
billion in the red because their premiums don't reflect the risk 
because they offer this insurance--and by the way, it's compulsory to 
buy that insurance if you borrow the money through a mortgage loan 
under a national bank. So it looks to me as though FEMA has been 
assigned by Congress and is carrying out an action that has now 
expanded the flood plains dramatically so that the people in these 
flood plains have to buy more and more flood insurance.
  And I looked at one area within one county in my district where there 
are 2,200 more properties and 1,100 more property owners that will be 
compelled to pay for the national flood insurance premium. Presumably, 
if you expand the areas that people are compelled to buy insurance and 
do business with the Federal Government, then you will be able to bring 
this Federal flood insurance out of their $19.2 billion in the red.
  Think of what happens when the Federal Government sticks their 
regulatory nose in every transaction in America, every credit 
transaction, every private flood insurance transaction, every health 
insurance transaction, operates and manufactures probably two-thirds of 
the American cars, probably not quite that many actually, and has 
already taken over the secondary loan market to where they are in more 
than 50 percent of the real estate.
  Mrs. BACHMANN. It even gets more minute than that because under the 
bill that's being debated right now over in the Senate, if a person has 
a transaction where it's four payments or more, so presumably if you 
buy braces for your child and you are paying by payments for your 
child's braces. If you have four payments or more that's a financial 
transaction that could come under the purview of the Federal 
Government. So the orthodontist would then have to conform with 
regulatory requirements from the Federal Government. That's how 
insidious this is getting.
  As a matter of fact, the bill I believe on the House side would give 
the Federal Government the authority through a new pay czar that has 
been selected who would establish the wages of like a bank teller in 
Peoria, Illinois. So the Federal Government isn't just getting into big 
things, they are getting into every small area of our life. And I think 
we just haven't begun to see the levels of involvement.
  The other thing you had mentioned, Congressman King, and Madam 
Speaker, is that you had wondered about President Obama and where he is 
going. There is no exit strategy because this current financial reform 
bill that we are looking at is all we need to know about where 
President Obama and the Democrats that control Congress want to go. 
They want more Federal Government intervention. They want more Federal 
Government spending, which necessitates more Federal Government 
borrowing, which will mean more taxes.

  But what are those taxes? The President has punted that issue to his 
new commission. But we all know a boatload of taxes needs to be raised. 
And we are in all likelihood looking at a new form of a national sales 
tax with a VAT tax, which would mean every item we purchase would have 
a tax of about 25 percent attached to it. So if you go through the 
value drive-in meal at McDonald's or a fast food place, although I 
guess we aren't going to be allowed to eat fast food anymore, it looks 
like that's the road we are going down next, instead of paying a dollar 
for that item, now we are going to have to pay $1.25.
  All of this means real consequences for real people's lives. It means 
fewer choices we can make. And apparently what President Obama and the 
Democrats who control Congress believe is that the American people have 
too much discretionary income and the American people shouldn't have 
that discretionary income. They really are the party of big government 
and of government making the choices over our lives.
  The Republicans have a different view. We believe that people make 
the better choices, and we want them to keep their money. But 
unfortunately, President Obama has laid all his cards down on the 
table, as have the Democrats that run Congress, and they have made a 
decision. It's very clear. We know because their bills are already 
before us. Anyone can read them online. And they want to be involved in 
the smallest financial transactions of our lives. And ultimately they 
want to decide who will get credit in this country and who won't. That 
will stifle every one of us in this country. And it won't mean job 
growth, it won't mean job creation. But we can do far better than that.
  Mr. KING of Iowa. Well, and they decided who would get the credit on 
home loan mortgages based upon the cash flow of the welfare check. And 
it didn't work out so well. That's one of the examples. I am standing 
here thinking about this. Where would they stop? A party whose policy 
is change, who don't have any timeless values, there is not even a 
definition of truth over on that side that they can agree on, it is 
about change.
  And I have often said that if you would give me the magic wand and I 
could grant to the progressives, the liberals, the people that fit that 
definition of folks on that side of the aisle their wish, which would 
be the entire wish list of all the things that they could compile on 
that list between now and New Year's, and say to them you get all of 
this, you get all of this, every policy that you can possibly dream of, 
and we are going to give it to you when the ball drops at Times Square 
for New Year's, but the deal is then you have to clam up and not be 
clamoring for change any more, you have to live under all of the rules 
and all of the changes that you advocate for, here is what I can 
guarantee you. They would work night and day to make this list as 
complete as possible.
  They would work right up to the last minute. They would have an 
amendment they were trying to slip in as the ball was dropping at Times 
Square to bring New Year's about and grant them their wish. And then 
when they were granted everything they wished, they would stay up the 
rest of the night trying to figure out how they got cheated and what 
they forgot. And they would never keep their word about having to live 
under the rules and the regulations that were part of their wish list.
  We, on the other hand, believe in timeless values. We believe in the 
integrity of the human being. We believe that our rights come from God. 
We believe in free enterprise capitalism. We believe in property 
rights. We think that people that work should live better than those 
that don't. We believe the wealth of this Nation is not a zero sum 
game, but it's something that's built upon the entrepreneurial spirit 
and the foundations of free enterprise, property rights, individual 
rights, not group rights. And the destiny of America is going to be 
determined by the amount of liberty that we can grant to people out of 
this Congress instead of diminish from them.
  And my mission is to go forth and to give back out of this Congress 
the rights that rightfully come from God to the people that have worked 
so hard to build this country, and not to destroy it incrementally by 
these huge bites out of our freedom and our liberty. And the question 
that comes to me is what would a socialist do, what would a progressive 
do, what would a liberal do that a communist would not? Where do they 
draw the line? This has been a breathtaking sweep into a takeover of 
huge chunks of our economy. And they have designs on big chunks of the 
economy yet. When there is no restraint except the American people and 
the constitutional conservatives that are filling the streets of 
America.
  They come out with their American flags, their yellow Gadsden ``Don't 
Tread on Me'' flags, their constitutions in their pocket, and 
patriotism in their hearts, and tears running down their cheeks because 
of what they see is happening to America under this ruling troika of 
Obama, Pelosi, and Reid. And it's going to turn around, Mr. Speaker. 
It's going to turn around this November. It's coming back into the 
hands of the people. And we will have a lot of work to do to clean up 
the mess.
  One of the things is on the immigration cards, the flash cards that 
train people to study their naturalization and pass the test. On one 
side it will say, ``Who is the father of our country?'' You snap it 
around and it says, ``George Washington.'' You pick up I

[[Page H3012]]

think it's card 11, and it says, ``What is the economic system of the 
United States?'' You flap that card around and it says, ``Free 
enterprise capitalism.'' It probably isn't the case today given what's 
happened.
  I don't want to have to pull that card out of the deck. I want the 
freedom, the liberty card in the deck. And I want to be able to see my 
children and grandchildren and every succeeding generation not live the 
American dream, but live the American dream in addition with a higher 
standard of living and greater aspirations and more liberty than we 
had, which is tremendous.
  This is what is pulling at the heart of America. This is why the 
constitutional conservatives, which are comprised of the Obamaites with 
buyers' remorse, the independents that really don't want a label but 
they understand the Constitution and free enterprise, the 9-12 Project 
people that have been so activated here on September 12, all of the Tea 
Party groups that are there, the conservative Republicans, in fact, 
almost every Republican constitutional conservative, people that 
understand that our default position needs to be the Constitution 
itself and not some activist judge's idea of what they would want that 
Constitution to say, but what it actually says, what it was understood 
to mean at the time of its ratification.

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