[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
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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
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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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