[Congressional Record (Bound Edition), Volume 154 (2008), Part 18]
[House]
[Page 24648]
[From the U.S. Government Publishing Office, www.gpo.gov]




   ECONOMIC STIMULUS: BIG, FAST, TOUGH, TEMPORARY, AND SELF-REVERSING

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Sherman) is recognized for 5 minutes.
  Mr. SHERMAN. Mr. Speaker, let me commend you on your years of service 
to this House, to your district, and to the Nation, and I look forward 
to working with you and serving the people of this Nation in whatever 
capacity your future takes you.
  I'd like to address the kind of economic stimulus that we should 
write next month. I hope that the economic stimulus is big, fast, 
tough, temporary, and self-reversing.
  We face the specter, not just of a recession, but of a depression. A 
deflationary cycle threatens a long period of economic contraction. We 
need an enormous, immediate economic stimulus. But unless that stimulus 
is well-designed, it may not pass Congress, and we may not achieve its 
objectives or it may sow the seeds of future, disastrous declines in 
the value of the dollar.
  Now, it is important that this stimulus be fast and be very large, 
but it also needs to be tough because Federal dollars should not be 
extended to private interests except on the toughest terms. Taxpayers 
should demand the highest yields, the largest equity upside, and the 
strictest limits on executive compensation and perks.
  Being tough on those who get bailouts will give us three advantages. 
First, it will increase public support for the bailout, and we are 
going to need a lot of public support to enact the size of stimulus 
that is necessary.
  Second, by being tough on those obtaining bailouts, we can limit the 
number of companies that seek bailouts. Not even the Federal Government 
can afford to provide a bailout to everyone who will ask for it if 
executives see the Federal Government as a source of easy and cheap 
money.
  Third, by getting a good deal on each investment we make, we minimize 
the eventual increase in the Federal deficit and the eventual burden to 
succeeding generations. Many of the companies that we make investments 
in will still not make it. So we had better make a good profit on our 
winning investments. We need to look at not only the rate of return 
that we get on preferred stock but on the value of the warrants because 
the warrants are our share, as taxpayers, of the upside of those 
companies that are successful.
  It, therefore, concerns me that on a recent bailout of Goldman Sachs 
by the Treasury Department, we taxpayers got half the rate of return 
and one-sixth the warrants that Mr. Warren Buffett was able to receive 
on a very similar investment in the same firm.
  So we must be tough. But we also must make sure that the stimulus we 
adopt is temporary and reversible. Keynesian economics offers a simple 
prescription for the difficult economic times ahead. Easy money now, 
and austerity when the economy improves.
  But how in good conscience can I vote for a massive economic stimulus 
now if I believe that Congress will not be able to adopt fiscal 
restraint later? I know we in Congress love handing out money in the 
form of tax cuts or infrastructure projects or subsidies or aid. Can we 
count on a future Congress to discontinue expansionary policies and 
adopt austerity when times demand?
  If we adopt a huge fiscal stimulus economy now, then both our 
tendencies toward profligacy and toward inertia may cause us to leave 
the spigot on too long, perhaps permanently.
  What is likely to happen I fear is that the advocates of fiscal 
responsibility will prevent us today from getting the full measure of 
economic stimulus that we need now, and that advocates of tax cuts and 
free spending tomorrow will prevent us from turning off the spigot when 
that is what we should be doing. We will get inadequate stimulus in 
2009, and we will continue the stimulus long after it is necessary and 
even when it is harmful.
  To avoid this outcome, the stimulus package should be both temporary 
and self-reversing. The same statutes which provide for a huge stimulus 
now should also provide for particular and identified tax increases and 
expenditure cuts to go into effect in 2013 automatically. The statute, 
of course, could provide that those automatic actions will be delayed 
temporarily if we fail to achieve 3 percent economic growth in 2012.
  Now, sure, we're going to need to fine-tune this program later, but 
we need to give the upper hand to those Members of Congress who will 
advocate for fiscal responsibility in the early part of the next 
decade. If austerity in 2013 is mandated by statute that we adopt in 
2009, then the advocates of fiscal responsibility will have a fighting 
chance when the budgets are negotiated early next decade.
  Only if the economic stimulus proposal is tough, temporary, and self-
reversing can we be confident that Congress will adopt a proposal that 
is big enough and fast enough to meet today's needs. And only if the 
stimulus measures are temporary and self-reversing can we make sure 
that the actions we take today do not lead to inflation, higher 
interest rates, a declining dollar and an enormous permanent increase 
in our Federal deficit in the years to come.

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