Hensarling and Pence on the Bailout Battle

U.S. Congressman Mike Pence released the following statement announcing his opposition to the revised bailout bill:

“Our nation is confronted by a serious financial crisis. It is a crisis of confidence in our financial markets and a crisis of confidence in this government. While many are anxious about how we will confront this crisis, as I saw on the faces of my constituents this week, many more approach this moment with faith, not fear.

“We will get through this.  We have confronted much greater challenges than this and I am confident we will restore our markets and renew our government.  But we must do so in a manner consistent with the principles that make America great.

“The President and Congress were right to act with all deliberate speed and I am confident that the members in this House are motivated by what they believe to be in the best interests of the American people.

“It must be said that Republican leaders and my colleagues in the House worked hard to improve this bill from the outset. House Republicans slowed down this process long enough to remove outrageous subsidies for liberal activists and trial lawyers and managed to include an optional insurance program.

“And because of the principled stand taken by House Republicans last Monday, the bank deposits of Americans are safer and the balance sheet of their local bank is more secure. Americans will see their bank deposit insurance rise from $100,000 to $250,000, and banks will now be able to value assets much closer to fair market value, increasing their capital and their ability to make credit available to working families, small businesses and family farms.

“But even with these important improvements, this legislation remains the largest corporate bailout in American history, forever changes the relationship between government and the financial sector and passes the cost along to the American people.

“I did not come to Washington to expand the size and scope of government.

“I did not come to Washington to ask working Americans to subsidize the bad decisions of corporate America.

“Therefore, I cannot support the Emergency Economic Stabilization Act of 2008.

“While this bill promises to bring near-term stability to our financial turmoil, I ask my countrymen, at what price?

“The decision to give the federal government the ability to nationalize almost every bad mortgage in America interrupts a basic truth of our free market economy.

“Government cannot control outcomes in the economy without eroding the independence and integrity of our free market system.  When the government chooses winners and losers in the market, every American loses.

“This Congress will choose whether we will confront this crisis by elevating the individual and personal responsibility or by elevating the role of the state in our financial markets and our daily lives.

“Some say that this crisis is too acute to rely on antiquated notions about the role of government in the private sector, but I disagree. I believe the principles of limited government, free enterprise and representative democracy are as relevant today as they were in 1776.

“In another October — 1964 — Ronald Reagan addressed the American people about a ‘time for choosing’ not much different than today.  He said their choice was ‘whether we believe in our capacity for self-government or whether we abandon the American Revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can plan them ourselves.’

“There are no easy answers, but the American people deserve to know there were alternatives to massive federal spending.

“The House Republican alternative would have set up an FDIC-style mandatory insurance program in which Wall Street firms would have paid to insure their mortgage-backed securities. Doing so would have made Wall Street instead of Main Street pay the cost of this rescue. And while there is an option for an insurance plan in this bill, it falls far short of the substitute that Republicans desired.

“The House Republican alternative would also have injected liquidity into our markets through fast-acting tax strategies, releasing the economic power inherent in the American economy. Temporarily reducing the repatriation tax, as we did in 2004, would have brought hundreds of billions of dollars back into this economy.  House conservatives also promoted reducing the individual and corporate capital gains tax. And, there were other business deductions that would help the financial sector get back on its feet.

“Should the current legislation pass and our economy continue to struggle, I remain hopeful that this Congress will turn to these and other proven remedies based on our free enterprise system and belief in limited government.

“President Theodore Roosevelt said, ‘An American… must face life with resolute courage, win victory if he can and accept defeat if he must, without seeking to place on his fellow man a responsibility which is not theirs.’

“With this bill we place upon the American public a responsibility which is not theirs: bailing out financial institutions after they made irresponsible business decisions.  This we should not do.

“Instead we should confront this crisis with resolute courage and faith in God and the principles of freedom and free enterprise.  I urge my colleagues to oppose the Emergency Economic Stabilization Act of 2008.”

Today’s remarks as prepared for delivery by Congressman Jeb Hensarling (R-Texas), Chairman of the House Republican Study Committee, during House consideration of the Financial Stabilization Package:

“I come to the floor with an odd combination of resignation, relief, doubt, hope, and fear.  I was surprised when the House version failed on Monday — and I will be even more surprised if the Senate version fails today.  Thus, I am resigned.  But with that resignation also comes some measure of relief that at least some plan to deal with the national crisis at hand.

“As I and other House conservatives have said from the beginning — inaction is not an option.  The crisis on Wall Street is inflicting Main Street, even as we speak.  There is panic in our credit markets, which are freezing up.  They need calm and they need capital.  As much as it pains our principles, most House conservatives conclude that some temporary form of the full faith and credit of the United States is necessary to address the crisis.  We understand without action, many of our fellow citizens may find themselves laid off from their jobs, unable to refinance their homes, or perhaps find their credit card limits curtailed as they attempt to buy food or medicine.

“House conservatives worked tirelessly to put forth a number of different plans, ideas and legislation to remedy the crisis.  On their behalf, I take great pride in the role that we played and the role our Republican House Leadership played in improving the legislation before us.  Thanks to our efforts, there is greater accountability in this legislation.  The insurance workout model of Mr. Eric Cantor and Mr. Paul Ryan now has an opportunity to work.  Executives of troubled firms seeking money from taxpayers will have their compensation limited.  There is greater opportunity for taxpayer upside, mark-to-market rules are now in revision, and FDIC limits have been increased.  These are all Republican improvements that we sought to achieve.  Not only do I want to thank House conservatives, I want to acknowledge and thank many of my Democrat colleagues with whom we found common ground on a number of these issues and with whom we were able to work in concert.

“Let me now speak to my hopes and fears.  No one truly knows if this plan will work.  We all hope it does.  No one knows the true amount of taxpayer exposure.  Treasury could spend $700 billion in no time flat and come right back to Congress for $700 billion more.  Some believe the taxpayer will actually make money in the deal and I hope that proves true.  But history as my guide, I have strong fears it will not.  And at what point do we finally bailout the American taxpayer from the unconscionable burden he or she faces from out of control Washington spending?

“I fear that the legislation before us still remains more of a bailout than a work out. I fear it undermines the ethic of personal responsibility.  I fear that it rewards bad behavior and punishes good.  But my greatest fear is that it changes the role of the federal government in our free market economy, which despite its current problems, remains the envy of the world.  How can we have capitalism on the way up and socialism on the way down?  If we lose our ability to fail will we not in turn lose our ability to succeed?  If Congress bails out some firms and sectors, how can it say no to others?

“We must be very careful as we address this financial crisis to ensure that any short-term gain does not come at the cost of even greater long-term pain — that being the slippery slope to socialism.  The thought of my children growing up in America with less freedom and less opportunity is a long-term pain I cannot bear.  Therefore, I will again vote ‘no’ on this legislation.  And as I told my colleagues before the last vote, when I cast my ‘no’ vote, I will cast it with some doubt.

“Some conservatives will support this legislation because they feel it is the last opportunity to address the crisis.  They may be right.  Some conservatives will support this legislation because they view it as the lesser of two evils.  They may be right. Principled conservatives may conclude differently than me, and I respect each and every one of them. We have all struggled to do our duty and cast the vote we believe to be right.   If by chance this legislation fails, House conservatives stand ready to immediately offer alternatives and negotiate a workable, bipartisan solution.  If it passes, we stand ready to help make it work and pray that our hopes are realized and our fears are not. 

“Our fight for freedom and opportunity continues.”