Michele Bachmann on Budget & Economy
Republican Representative (MN-6); 2011 GOP frontrunner
Yet it was painful to find out that John McCain too favored the TARP bailout. The same disappointing stance was taken by the Republican leadership in the House. John Boehner went on national TV to label TARP a "crap sandwich"--and then, in the next breath, he said we should vote for it anyway.
I knew there was no way I could vote for it, because I couldn't find authority for it in the Constitution. I simply couldn't support it. So I voted no. That's where I stood, and that's where I stand, As a constitutional conservative, I put principle over party.
Its purpose is "to promote financial stability by improving accountability and transparency in the financial system, to end 'too big to fail,' to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices."
The nearly 2,000 pages of Dodd-Frank proved to be just another mosh pit for lobbyists, allowing them to jump around from loophole to bailout to special carve-out. Indeed, Dodd-Frank represents yet another explosive expansion of the regulatory state that will continue to cost the US economy trillions, as banks try to cope with new layers of uncertainty, confusion, costs, & court cases.
A: If you look at the problem with the economic meltdown, you can trace it right back to the federal government, because it was the federal government that demanded that banks and mortgage companies lower platinum-level lending standards to new lows.
Q: But the federal government had also deregulated them.
A: It was the federal government that pushed the subprime loans. It was the federal government that pushed the Community Reinvestment Act, and government-directed housing goals. They pushed the banks to meet these rules. And if banks failed to meet those rules, then the federal government said, we won't let you merge; we won't let you grow. There's a real problem: We had artificially low interest rates. Freddie and Fannie were the center of the universe on the mortgage meltdown, and we had lending standards lowered for the first time in American history.
BACHMANN: Last summer I was a lone voice saying: "Do not increase the debt ceiling." By that, I was saying, "Let's not give Obama another $2.4 trillion blank check to spend." We are spending 40% more than what we take in. We paid $2.2 trillion in taxes. The American government spent 100% of that $2.2 trillion. But the travesty is they spent $1.5 trillion more than that. That's the problem. Every year, we are spending about 40% more than what we take in. Our answer has to be that we cut back on the spending so we get to balance. Young people are going to be paying for this burden. Their tax rates some day in their peak earning years could be as much as 75%.
Q: Cutting back on spending will do it?
BACHMANN: That's one piece of the answer. That's not the whole answer. We have to cut taxes.
BACHMANN: Well, there's a reason why the deficit went up and up and up. When you have a trillion dollars worth of spending that you don't pay for, it's going to go up. And now we're seeing again that the president wants to do more of the same. I was the leading voice in the wilderness of Washington all summer. I was one of the only people in Washington that said do not raise the debt ceiling. Don't give the president of the United States another $2.4 trillion blank check. You've got to draw the line in the sand somewhere and say no more out of control spending. It really isn't that tough if you try. It is easy to turn around this economy, just have the backbone to do it.
BACHMANN: As president, I would not be reappointing Ben Bernanke. I worked behind the scenes against the $700 billion bailout, because one of the things that I saw from the Federal Reserve, the enabling act legislation is written so broadly that Congress has given the Federal Reserve almost unlimited power over the economy. That has to change. They can no longer have that power. Why? Because what we saw, with all of the $700 billion bailout, is that the Federal Reserve opened its discount window and was making loans to private American businesses. And not only that, they're making loans to foreign governments. This cannot be. The Federal Reserve has a lot to answer for. And that's why it's important that they're not only audited, but they have got be shrunk back down to such a tight leash that they're going to squeak.
Q: Do you agree with Gov. Perry that Ben Bernanke is engaged in treason?
BACHMANN: I would not reappoint Ben Bernanke.
PERRY: I join my fellow participants here. What we should have been looking at is a way to get the spending under control and capping it, cutting it, and getting a balanced budget amendment.
Q: Did anyone else who had their hand up at that last debate want to amend your comment since then
BACHMANN: Well, there's someone else who would join us in that agreement, and that would be Ronald Reagan, because Ronald Reagan made a deal where he took $3 in spending cuts for $1 in tax increases. And, in fact, what happened is that there ended up being $3 in tax increases and $1 in tax cuts. That's the problem with Washington, D.C. I've seen it all the time. That's why I've been leading on this issue for the last five years and why we can't trust the status quo in Washington, D.C.
A: Consider what happened by raising the debt ceiling: The Congress gave Barack Obama a blank check for $2.4 trillion. What did the American people get in return? $21 billion in illusory cuts. So from the time I've been in Congress, we've gone from $8.6 trillion in debt to now almost double, to $16.7 trillion. This is madness The worst thing that you can do is continue to borrow money and spend money that we don't have.
Q: What do you say to the analysts who say that the markets would have fallen through the basement?
A: I think we just heard from Standard & Poor's. When they dropped our credit rating, what they said is, we don't have an ability to repay our debt. I was proved right in my position: We should not have raised the debt ceiling. And instead, we should have cut government spending.
BACHMANN: The thinking that says that we have to continue to raise the debt ceiling and spend money that we don't have is the wrong premise. The American people are asking for a very different, bold vision. And I was the leading voice against raising the debt ceiling. That's what the American people want us to do: have our balanced budgets and also have our spending priorities in order. That was the right thing to do.
Bachmann: The only way to avoid future increases is to fundaentally change the way we spend. We must pass "Cut, Cap, and Balance" and repeal Obamacare.
Gingrich: We can balanc the budget again by growing the economy, cutting spending and reforming government. That's how we did it before. We CAN do it again.
McCotter: "Cut, Cap & Balance" is the immediate solution to prevent a recurrence of the debt mess. The long term solution is not to simply restructure Big Government; but to restructure Big Government into self-government for the 21st Century. All else is to but parley amidst the ruins of the Welfare State.
Bachmann: As then-Sen. Obama said in 2006, raising the debt ceiling is a failure of leadership. We need real spending reform, not empty promises. The lesson of 1982 and 1990 is that promised spending cuts never last while higher taxes persist. No more business-as-usual. No debt hike
Opponent's Argument for voting No:Rep. MAFFEI: The American people want us to work together--Republicans and Democrats--to reduce our debt, pay our bills, and avoid an economic catastrophe, which would result from default. This legislation presumes it will happen and maps out not if but what happens when the United States defaults. Their plan ensures that foreign creditors such as China, Japan, and OPEC countries Iran and Saudi Arabia would continue to get paid while we halt other payments to groups of Americans who have earned those benefits. This bill prioritizes Chinese lenders ahead of American seniors and veterans and college students. That's why it's called the Pay China First Act.
White House statement in opposition:American families do not get to choose which bills to pay and which ones not to pay, and the United States Congress cannot either without putting the nation into default for the first time in its history. This bill would threaten the full faith and credit of the United States, cost American jobs, hurt businesses of all sizes and do damage to the economy. It would cause the nation to default on payments for Medicare, veterans, national security and many other critical priorities. This legislation is unwise, unworkable, and unacceptably risky."
Proponent's Argument for voting Yes:
[Rep. Biggert, R-IL]: The HAMP Termination Act would put an end to the poster child for failed Federal foreclosure programs. The program has languished for 2 years, hurt hundreds of thousands of homeowners, and must come to an end. This bill would save $1.4 billion over 10 years. To date, the HAMP program has already consumed $840 million of the more than $30 billion of TARP funds that were set aside for the program. For this extraordinary investment, the administration predicted that 3 to 4 million homeowners would receive help. HAMP has hurt more homeowners than it has helped. The program has completed about 540,000 mortgage modifications. Another 740,000 unlucky homeowners had their modifications cancelled.
Opponent's Argument for voting No:
[Rep. Capuano, D-MA]: This is a program that I'm the first to admit has not lived up to what our hopes were. This program we had hoped would help several million people. Thus far we've only helped about 550,000 people. But to simply repeal all of these programs is to walk away from individual homeowners, walk away from neighborhoods. I'm not going to defend every single aspect of this program, and I am happy to work with anyone to make it better, to help more people to keep their homes, & keep their families together. To simply walk away without offering an alternative means we don't care; this Congress doesn't care if you lose your home, period. Now, I understand if that makes me a bleeding-heart liberal according to some people, so be it.
Proponent's argument to vote Yes:Rep. LEWIS (D, GA-5): This bipartisan bill will provide the necessary funds to keep important transportation projects operating in States around the country. The Highway Trust Fund will run out of funding by September. We must act, and we must act now.
Opponent's argument to vote No:Rep. CAMP (R, MI-4): [This interim spending is] needed because the Democrats' economic policy has resulted in record job loss, record deficits, and none of the job creation they promised. Democrats predicted unemployment would top out at 8% if the stimulus passed; instead, it's 9.5% and rising. In Michigan, it's above 15%. The Nation's public debt and unemployment, combined, has risen by a shocking 40% [because of] literally trillions of dollars in additional spending under the Democrats' stimulus, energy, and health plans.
We had a choice when it came to the stimulus last February. We could have chosen a better policy of stimulating private-sector growth creating twice the jobs at half the price. That was the Republican plan. Instead, Democrats insisted on their government focus plan, which has produced no jobs and a mountain of debt.
Proponent's argument to vote Yes:Rep. PETER WELCH (D, VT-0): Citigroup supports this bill. Why? They're a huge lender. They understand that we have to stabilize home values in order to begin the recovery, and they need a tool to accomplish it. Mortgages that have been sliced and diced into 50 different sections make it impossible even for a mortgage company and a borrower to come together to resolve the problem that they share together.
Sen. DICK DURBIN (D, IL): 8.1 million homes face foreclosure in America today. Last year, I offered this amendment to change the bankruptcy law, and the banking community said: Totally unnecessary. In fact, the estimates were of only 2 million homes in foreclosure last year. America is facing a crisis.
Opponent's argument to vote No:
Sen. JON KYL (R, AZ): This amendment would allow bankruptcy judges to modify home mortgages by lowering the principal and interest rate on the loan or extending the term of the loan. The concept in the trade is known as cram-down. It would apply to all borrowers who are 60 days or more delinquent. Many experts believe the cram-down provision would result in higher interest rates for all home mortgages. We could end up exacerbating this situation for all the people who would want to refinance or to take out loans in the future.
Rep. MICHELE BACHMANN (R, MN-6): Of the foundational policies of American exceptionalism, the concepts that have inspired our great Nation are the sanctity of private contracts and upholding the rule of law. This cramdown bill crassly undercuts both of these pillars of American exceptionalism. Why would a lender make a 30-year loan if they fear the powers of the Federal Government will violate the very terms of that loan?
Proponent's argument to vote Yes:Rep. DAVID OBEY (D, WI-7): This country is facing what most economists consider to be the most serious and the most dangerous economic situation in our lifetimes. This package today is an $825 billion package that does a variety of things to try to reinflate the economy:
Opponent's argument to vote No:
Rep. JERRY LEWIS (R, CA-51): Most of us would agree that the recent $700 billion Troubled Asset Relief Program (TARP) is an illustration of how good intentions don't always deliver desired results. When Congress spends too much too quickly, it doesn't think through the details and oversight becomes more difficult. The lesson learned from TARP was this: we cannot manage what we do not measure. We cannot afford to make the same mistake again.
Sen. THAD COCHRAN (R, MS): We are giving the executive branch immense latitude in the disbursement of the spending this bill contains. We are doing so without any documentation of how this spending will stimulate the economy. Normally, this kind of information would be contained in an administration budget. For items that have a short-term stimulative effect, most of us will feel comfortable debating their merits as an emergency measure. But there is a great deal of spending that is not immediately stimulative.
Proponent's argument to vote Yes:Rep. BARNEY FRANK (D, MA-4): Last year, after we responded to the urgent pleas of the Bush administration to authorize the $700 billion deployment of Federal funds to unstick the credit markets, many of us became very unhappy, [because Bush] repudiated commitments to use a significant part of the fund to diminish foreclosures. If we do not pass this bill today, we will make no progress in what is the single biggest economic problem we've been facing, namely, the foreclosure crisis.
Opponent's argument to vote No:Rep. RON PAUL (R, TX-14): There has been a lot of money spent to try to bail out the financial industry, and nothing seems to be working. I think it's mainly because we haven't admitted that excessive spending can cause financial problems, & excessive debt and inflation can cause problems.
Actually, the recession is therapy for all of the mistakes, but the mistakes come, basically, from a Federal Reserve system that's causing too many people to make mistakes. Interest rates are lower than they should be, so they don't save. That contributes to what we call "moral hazard" as well as the system of the Fannie Mae and Freddie Mac system. With the assumption that we're all going to be bailed out, people say, "Well, no sweat because, if there is a mistake, the government will come to our rescue." A private FDIC would never permit this massive malinvestment. There would be regulations done in the marketplace, and there would not be this distortion that we've ended up with.
Proponent's argument to vote Yes:Rep. BARNEY FRANK (D, MA-4): This economy is in the worst shape that it has been in since the Great Depression. This Congress voted 2 months ago to advance $25 billion to the auto industry to promote innovation. This $15 billion is an additional "bridge loan."
Opponent's argument to vote No:Rep. SPENCER BACHUS (R, AL-6): We all understand that the bankruptcy of either GM or Chrysler would have a cascading effect on other manufacturers. But I cannot support this plan because it spends taxpayer money without any real promise to return the industry to profitability. I see several glaring flaws. We are creating a new car czar to manage these companies from Washington; not a CEO, but a car czar. Second, this legislation actually imposes new and expensive mandates on our automobile companies. Third, this legislation imposes Federal Government management on the Big Three, the wisdom of Washington. It is clear that the management of these companies have made mistakes, many mistakes, but to set up a command and control Federal bureaucrat is exactly the wrong solution.
Rep. RON PAUL (R, TX-14): The problems that we are facing today date back to 1971. But we don't seem to want to go back and find out how financial bubbles form and why they burst. Instead, we just carry on doing the same old thing and never look back. We spend more money, we run up more debt, we print more money, and we think that is going to solve the problem that was created by spending too much money, running up debt, printing too much money. Today, we are talking about tinkering on the edges without dealing with the big problem.
Proponent's argument to vote Yes:Rep. DAVID OBEY (D, WI-7): Congress has tried to do a number of things that would alleviate the squeeze on the middle class. Meanwhile, this economy is sagging. Jobs, income, sales, and industrial production have all gone down. We have lost 600,000 jobs. We are trying to provide a major increase in investments to modernize our infrastructure and to provide well-paying construction jobs at the same time.
Opponent's argument to vote No:Rep. JERRY LEWIS (R, CA-41): Just 2 days ago we were debating an $800 billion continuing resolution. Now in addition to being asked to pay for a bailout for Wall Street, taxpayers are being asked to swallow an additional $60 billion on a laundry list of items I saw for the first time just a few hours ago. The Democratic majority is describing this legislation as a "stimulus package" to help our national economy. But let's not fool ourselves. This is a political document pure and simple. If these priorities are so important, why hasn't this bill gone through the normal legislative process? We should have debated each of the items included in this package.
It doesn't take an economist to tell you that the economy needs our help. But what does this Congress do? It proposes to spend billions more without any offsets in spending. The failure to adhere to PAYGO means that this new spending will be financed through additional borrowing, which will prove a further drag on our struggling economy.
Opponents argument for voting NAY: Rep. BARTON of Texas: [My first issue the bill is that by the bill's own definition], we don't have price gouging in the US today. We do have high prices. But the reason we have that price is not because of price gouging at retail. I am not aware of any pending State action on price gouging, and almost every State has State law to go after price gougers.
The second issue with the bill, it requires the declaration of a Presidential energy emergency. The bill doesn't give any definition as to why the President should declare an energy emergency; it doesn't define "unconscionably excessive"; it doesn't define when a "seller is taking unfair advantage."
I know there is a lot of pressure on the Congress doing something. I would state we would be better served to look at the underlying fundamentals that address the supply situation.
SUPPORTER'S ARGUMENT FOR VOTING YES:Rep. WATERS: This bill preserves public housing. The administration eliminated the one-for-one replacement requirement in 1996, effectively triggering a national sloughing off of our Nation's public housing inventory. Housing authorities have consistently built back fewer units than they have torn down and, as a result, over 30,000 units have been lost. I urge you to support our Nation's low-income families and to preserve our housing stock.
OPPONENT'S ARGUMENT FOR VOTING NO:Rep. HENSARLING: President Reagan once said that the nearest thing to eternal life on Earth is a Federal program, and I don't think there is any better case study than perhaps the HOPE VI program. If there was ever a program that cried out for termination, it's this one.
This program began in 1992 with a very noble purpose of taking 86,000 units of severely distressed public housing and replacing them, demolishing them. Well, it achieved its mission. But somewhere along the line we had this thing in Washington known as mission creep.
We already have 80-plus Federal housing programs, and the budget for Federal housing programs has almost doubled in the last 10 years, from $15.4 billion to more than $30 billion now. So it's very hard to argue that somehow Federal housing programs have been shortchanged.
LEGISLATIVE OUTCOME:Bill passed House, 271-130
Proponents support voting YES because:
Rep. FRANK: This legislation seeks to prevent a repetition of events that caused one of the most serious financial crises in recent times. We have a worldwide problem economically, with a terrible shortage of credit. Innovations in the mortgage industry, in themselves good and useful, but conducted in such a completely unregulated manner as to have led to this crisis. The fundamental principle of the bill is not to put remedies into place, but to stop future problems from occurring in the first place. We have had two groups of mortgage originators: banks subject to the regulation of the bank regulators; and then mortgage loans made by brokers who were subject to no regulation. The secondary market has been on the whole useful but, having been unregulated, has caused some problems.
Opponents recommend voting NO because:
Rep. HENSARLING: This is a bad bill for homeowners in America. There is no doubt that this Nation faces a great challenge in the subprime market, but this piece of legislation is going to make the situation worse. Clearly, there has to be enforcement against fraud in the subprime market. But what Congress should not do is essentially outlaw the American Dream for many struggling families who may be of low income, who may have checkered credit pasts, for whom a subprime mortgage is the only means to purchase a home.
Constitutional Amendment to prohibit outlays for a fiscal year (except those for repayment of debt principal) from exceeding total receipts for that fiscal year (except those derived from borrowing) unless Congress, by a three-fifths rollcall vote of each chamber, authorizes a specific excess of outlays over receipts.
The Contract from America, clause 3. Demand a Balanced Budget:
Begin the Constitutional amendment process to require a balanced budget with a two-thirds majority needed for any tax hike.
The Contract from America, clause 6. End Runaway Government Spending:
Impose a statutory cap limiting the annual growth in total federal spending to the sum of the inflation rate plus the percentage of population growth.
The House Committee on Financial Services (also referred to as the House Banking Committee) is the committee of the House of Representatives that oversees the entire financial services industry, including the securities, insurance, banking, and housing industries. The Committee also oversees the work of the Federal Reserve, the United States Department of the Treasury, the U.S. Securities and Exchange Commission, and other financial services regulators.
This article shall take effect beginning with the later of the second fiscal year beginning after its ratification or the first fiscal year beginning after December 31, 2016.
A BILL: To rescind unobligated stimulus funds and require that such funds be used for Federal budget deficit reduction. This Act may be cited as the "Recovering Excessive Stimulus Expenditures for Taxpayers (RESET) Act."
[The Cut-Cap-and-Balance Pledge is sponsored by a coalition of several hundred Tea Party, limited-government, and conservative organizations].
Despite our nation's staggering $14.4 trillion debt, there are many Members of the U.S. House and Senate who want to raise our nation's debt limit without making permanent reforms in our fiscal policies. We believe that this is a fiscally irresponsible position that would place America on the Road to Ruin. At the same time, we believe that the current debate over raising the debt limit provides a historic opportunity to focus public attention, and then public policy, on a path to a balanced budget and paying down our debt.
We believe that the "Cut, Cap, Balance" plan for substantial spending cuts in FY 2012, a statutory spending cap, and Congressional passage of a Balanced Budget Amendment to the Constitution is the minimum necessary precondition to raising the debt limit. The ultimate goal is to get us back to a point where increases in the debt limit are no longer necessary. If you agree, take the Cut, Cap, Balance Pledge!
I pledge to urge my Senators and Member of the House of Representatives to oppose any debt limit increase unless all three of the following conditions have been met:
- Cut: Substantial cuts in spending that will reduce the deficit next year and thereafter.
- Cap: Enforceable spending caps that will put federal spending on a path to a balanced budget.
- Balance: Congressional passage of a Balanced Budget Amendment to the U.S. Constitution -- but only if it includes both a spending limitation and a super-majority for raising taxes, in addition to balancing revenues and expenses.
The Federal Reserve Transparency Act directs:
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