[Congressional Record (Bound Edition), Volume 156 (2010), Part 13]
[Senate]
[Pages 18435-18436]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     JOBS, THE ECONOMY, AND HOUSING

  Mr. ISAKSON. Mr. President, first of all, let me congratulate you on 
your victory and welcome you to the Senate. I know you will be a great 
addition to the Senate. I have already enjoyed serving with you on the 
HELP Committee this morning.
  Mr. President, I rise for just a few minutes to talk about three 
issues--jobs, the economy, and housing--that I think all of us around 
the country will recognize are the three biggest problems thwarting our 
recovery. There are some realistic solutions that are out there that I 
think we could all come together on if we would just take the time to 
realize that working on disagreement rather than finding agreement is 
not serving the Senate very well right now.
  One of the reasons we have had a slow job recovery is because of the 
uncertainty American businesses and American wage earners have in what 
their tax rates are going to be.
  I ran a company. It started out as a small company, and it became a 
pretty good-sized company. This was the time of year--every December--
when we had our managers' retreat, and we would plan what we would do 
the next year. We would do our budget, we would talk about new hires, 
new departments, and new ideas.
  Right now, corporations and small businesses in this country that are 
sitting around their planning retreats and talking about next year do 
not know what their tax rates are going to be, they do not know what 
their regulatory environment is going to be. So they are doing what 
every business does: They are making conservative decisions. They are 
not risking capital. They are going to wait until their future tax 
lives and regulatory lives have some degree of certainty.
  So one way to bring back jobs to America and bring them back quicker 
than anything else would be for this Senate and the House to come 
together and extend the existing tax rates for a predictable, 
foreseeable period of time so businesses know what the playing field is 
going to look like. The absence of certainty between now and the end of 
the year means that no one will make a decision to hire anybody until 
we first make a decision on what their taxes are going to be. If we 
decide they are going to go up, if we capitulate and let the current 
sunset take place, then American businesses, at a time of high 
unemployment and low productivity in terms of business activity, will 
see an increase in their tax rate and we will see a decrease in 
employment next year in the United States. I hope that doesn't happen. 
I hope we will find common ground and find a way to extend the existing 
tax rates.
  Secondly, I wish to talk about housing for a second because it is an 
important part of jobs. I know there have

[[Page 18436]]

been two speeches on the floor this week talking about some stimulus to 
bring the housing market back. One stimulus that will bring it back is 
to make taxes certain because if taxes become certain, people know what 
the taxes will cost them and they make important big-purchase 
decisions. When they have uncertainty in what their income or their net 
is going to be, they do not make big-ticket purchases, whether it is an 
automobile or a house.
  But there are other problems in housing as well. We need to 
fundamentally return to a marketplace that has some degree of liquidity 
in it for acquisition and purchases. Right now, except for the FHA and 
an occasional lender in terms of a jumbo lender to a big-ticket client, 
there is basically no mortgage money in the United States for an 
American home buyer. Because of mark to market being applied by the 
FDIC and the other cease-and-desist orders the banking institution and 
lenders are under, nobody is extending credit.
  In my State of Georgia--in Atlanta, GA--in 2006 there were 63,000 
housing permits. That was 2006, 4 years ago. This year, there were 
5,300. That is a 90-percent reduction in new construction. Granted, we 
were in a hypereconomy in 2006 and, granted, overbuilding probably 
contributed to the decline of the economy later on, but a 90-percent 
reduction is unhealthy. If we continue to sustain that reduction, we 
will continue to sustain what is a difficult economic period now.
  We need to be looking to the future. So my recommendations are, 
first, give us a platform of predictability by extending existing tax 
rates and not raising them in a rescession. That is No. 1. Secondly, 
recognize there is no liquidity in mortgage money in the United States.
  The longer we wait to address the question of what happens after 
Freddie and after Fannie, the longer the housing market will suffer. So 
I propose a solution for that problem in terms of housing finance. I 
don't think there is any question that Freddie and Fannie have to be 
wound down. They are in a conservatorship now. They have already cost 
us billions of dollars, and they will cost us billions more, which is 
why I worked hard to get them under the financial reregulation bill so 
we could peel back the layers of the onion and figure out what went 
wrong, but this body decided not to do that.
  But whatever happens, we have to create a new entity, and whatever 
happens, it will have to look, in some ways, like Freddie and Fannie 
but in other ways remarkably different. But there has to be a solution. 
The long-term solution can't be a government-sponsored entity or an 
implied government guarantee. That is what imploded in terms of Freddie 
and Fannie. And the taxpayers of America don't want you or me pledging 
their future full faith and credit behind a mortgage entity just to 
provide mortgage money. By the same token, they want us to be leaders, 
to find a way to get from where we are now, with no liquidity, to where 
we need to be, and that is with good liquidity.
  Here is my suggestion: we create a new entity to replace Freddie and 
Fannie--an entity that ends up having a government-implied sponsorship 
or guarantee, but over a 10-year period of time, it declines 10 percent 
a year to zero. During that same 10-year period of time, on every 
mortgage loan made in the United States, a fee will be attached to it 
at closing--maybe it is 50 basis points or half a percent, whatever it 
might be--that goes into a sinking fund. That sinking fund is walled 
off, and it grows over 10 years. As it grows, the government guarantee 
declines--for example, a-100 percent guarantee in the first year of the 
fund, 90 percent in the second year, 80 in the third, going down to 
zero in 10 years. As that fund guarantee goes down, the fund builds up, 
so it becomes the backstop for another failure that may or may not 
happen in the future but one for which we have to plan.
  This is not a new idea. There are not a lot of new ideas. In Great 
Britain, they have had Pool Re for years. That is the sinking fund they 
set up to handle catastrophic losses in terms of insurance. It has 
built up to be able to withstand the largest of catastrophic calls and 
has made their insurance system work very well.
  We need to establish a way for the government to sponsor an entity 
that gets out of the guaranteeing business but gets into the building 
of liquidity business and becomes an entity that can supply mortgages 
in the United States because there is not one now and there will not be 
one in the future until we create an entity that gives a foundation for 
liquidity to come back to the housing market. So here we are, 30 days 
from the end of the year. We don't know what our taxes are going to be 
next year, and if we wanted to go buy a house, we wouldn't know where 
we would find the mortgage money.
  This Senate can act and act quickly to make changes that see to it 
that jobs come back, and that is by extending the existing tax rates.
  When we come back together next year, I look forward to working with 
my colleagues on the other side and my colleagues in the Senate to 
create a mortgage-sponsored entity that will work and begin to bring 
liquidity back to the housing market so that construction returns, jobs 
come back, and America recovers.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Vermont.

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