Statement of Senator Chuck Grassley
on the Economic Stabilization Bill
Wednesday, October 1, 2008
During the last week, I’ve heard from Iowans that they don’t like this legislation. Many are angry that taxpayers are being asked to clean up a mess without any consequences for those who created the mess. They don’t want to throw good money after bad with a $700 billion bill that doesn’t fix the laws and regulations that let the housing and financial sectors get so out of control.
My vote for this bill is not easy because I respect those concerns, and I agree with them. At the same time, this legislation is the best opportunity we have today to avoid a credit crunch that might cripple our economy. No doubt credit will be tighter with or without this bill as the system becomes more cautious after acting too fast and loose for too long. The argument for this bill is that by unplugging the pipeline that’s clogged up with bad debt, good credit can flow. The U.S. Treasury can hold all that bad debt until its value returns with the goal of having the taxpayers recover some of the money, and possibly a great deal of the money, that’s being committed with this legislation.
Separate from this effort to rescue the financial system on behalf of families, independent business operators, small businesses, the farmers who feed us, and the communities that depend on their well being, I want the completely unrelated tax bill that’s now been tied to the financial system bill to become law. The tax bill includes extensions of tax incentives I’ve sponsored over a long period of time for biofuels, solar and wind energy. It includes protection for 24 million families from higher taxes because of the Alternative Minimum Tax which they were never supposed to pay. It also includes legislation I fought for all summer to provide disaster tax relief to flood and tornado victims just like Congress did after Hurricane Katrina. This legislation will be a major shot in the arm to small businesses struggling to recover, meet payroll and keep their doors open and to communities working to rebuild infrastructure and go forward. It’s wrong that Congressional leaders have made the fate of all these good tax policies for Main Street subject to this massive, controversial bill to try to rescue America’s financial system, but they did. Two weeks ago, the Senate voted with only two dissenting votes to pass these tax extensions and disaster tax relief. The only reason these tax policies are not already law is because of the House of Representatives putting political games ahead of people. The President has said he will sign the Senate tax extenders legislation into law.
Despite assertions to the contrary, the executive compensation provisions in H.R. 1424 are window dressing rather than a legitimate attempt to prevent golden parachutes and multi-million dollar paychecks for failed leadership. The legislation before us also falls short in making reforms to the laws and regulations plaguing the housing and financial sector. Yet the legislation before Congress this week remains necessary because of what’s at stake for Main Street America. It’s a terrible thing to be asking hardworking, modest living, personally responsible Americans to “bailout” Wall Street. The trouble is, Wall Street is going to take the rest of the country into a recession, and the government buying up bad debt is a way to stop them from doing so and protect retirees, near retirees, parents and students paying for college, everyone in agriculture, and credit-dependent small and independent businesses that drive the engine of our economy and employ America’s breadwinners. It protects savings by increasing for the first time since 1980 the Federal Deposit Insurance Corporation insurance of deposits, now up to $250,000. If the Treasury Secretary is half right about his forecast for what will happen to the financial system and America’s economy without the remedy of this legislation, then we need to do it. And we can’t stop there. Substantial reforms are needed to bring transparency and accountability to the financial sector elite. That includes hedge fund registration and fair accounting rules that ensure accurate disclosure by publicly held companies. Anything less will diminish the value of the pending legislation and be a failure of leadership by the United States Congress.
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