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January 12, 2009

INHOFE ANGERED BY PRESIDENT’S DECISION TO SPEND SECOND $350 BILLION BAILOUT INSTALLMENT

Link to Jim's Journal Blog Post on Bailout 

WASHINGTON, DC – U.S. Senator Jim Inhofe (R-Okla.) today took to the Senate Floor and expressed deep disappointment and anger over the President’s intention to request the second $350 billion installment of the $700 billion Wall Street bailout.  The following are excerpts of Senator Inhofe’s Floor Speech: 

“It’s been reported that the administration is set to request the second $350 billion sometime this week. If you were a reasonable person and were to assume that a major event in the financial world has prompted the negotiations the led to the decision on releasing the second $350 billion, you would be wrong. The true reason Congress may be asked to release the second $350 billion is politics. This program is so unpopular among members of both parties and among the public that we’re witnessing folks play a game of political hot potato with the TARP. Again, no event in the financial world has prompted this request for $350 billion. 

“Furthermore, is the United States Congress as an institution prepared to say “yes” to $350 billion in deficit spending simply because we receive a “letter of assurances?” A bunch of promises on paper is not sufficient justification for this institution to let go of the purse strings on $350 billion in taxpayer money. Congress needs to put itself back in the process when we’re talking about this kind of money. That’s why I introduced my legislation, S.64, with a bipartisan group of Senators, which says that the executive branch can only have access to the remaining $350 billion if Congress approves the submitted plan for spending the money in an affirmative vote, as opposed to simply a disapproval resolution. Congress must not again duck its responsibility to have a say in spending unprecedented amounts of money
 

“Finally, as a fiscal Conservative, the thing that really concerns me about the $700 billion bailout is that it permanently changed the perception about what is “big” in big government from now on. What’s another $50 billion here, or $100 billion there, after we give $700 billion to banks? What’s the big deal with $1 trillion dollar deficits, or $800 billion stimulus packages, or multibillion healthcare proposals, or whatever plan is dreamed up around here to spend the taxpayers’ money once we gave $700 billion to an unelected bureaucrat with no oversight? We have completely lost our perspective.  

“We simply cannot fast track a vote on the remaining $350 billion in this package.  Congress must actively debate sending any further funding under the original $700 billion authorization and exercise its institutional, and most importantly, its constitutional role to consider this program and have another vote.  My legislation, S. 64, would require another vote before any of the remaining $350 billion is available.  I think that is the only responsible action.” 

Senator Inhofe’s Full Remarks as Prepared for Delivery: 

It’s been reported that the administration is set to request the second $350 billion sometime this week. If you were a reasonable person and were to assume that a major event in the financial world has prompted the negotiations the led to the decision on releasing the second $350 billion, you would be wrong. The true reason Congress may be asked to release the second $350 billion is politics. This program is so unpopular among members of both parties and among the public that we’re witnessing folks play a game of political hot potato with the TARP. Again, no event in the financial world has prompted this request for $350 billion.  I have been critical of the Bush Administration and particularly of Secretary Paulson. Furthermore, is the United States Congress as an institution prepared to say “yes” to $350 billion in deficit spending simply because we receive a “letter of assurances?” A bunch of promises on paper is not sufficient justification for this institution to let go of the purse strings on $350 billion in taxpayer money. Congress needs to put itself back in the process when we’re talking about this kind of money. That’s why I introduced my legislation, S.64, with a bipartisan group of Senators, which says that the executive branch can only have access to the remaining $350 billion if Congress approves the submitted plan for spending the money in an affirmative vote, as opposed to simply a disapproval resolution. Congress must not again duck its responsibility to have a say in spending unprecedented amounts of money.   We have already seen that the legislation we passed last fall is a blank check for one person to do whatever he wants with billions of taxpayer dollars – take for instance, the auto bailout. We all know that bailing out the auto companies with TARP money had absolutely nothing to do with financial markets. Regardless of whether you supported the auto bailout or not, we all know that it had nothing to do with the original justification for the $700 billion bailout. The auto bailout proved that there are no limits, no checks and balances, on what the Treasury secretary can do with the money.     To refresh everyone’s minds about what we were told would be done with the money, Paulson came to us in September and said that if he didn’t immediately get $700 billion to buy bad assets the total economy would collapse. It was a panic scenario. Then the plans changed and Paulson began just injecting billions of dollars into banks with no justification provided to Congress or anyone else. Currently, and this is according to the Treasury Secretary himself, there is not an all-out panic in the financial world.  If that is the case, it’s my belief that the rationale for releasing any more of the $700 billion no longer applies.   As a matter of fact, a prominent economist from the Reagan Administration only last week stated that no benefits whatsoever came from the Paulson distributions.  It was clear to me at the time that it was a mistake to sign a blank check to one man for such a tremendous amount of money. Though there are still significant challenges in financial markets, it appears that the threat of financial crisis spinning so out of control that we face another Great Depression—which was the original justification for the grant of such sweeping authority—has subsided. Has the need to allow one person, whether it’s Secretary Paulson or Timothy Geithner, to give away hundreds of billions of taxpayer dollars to banks subsided as well? That’s the question that needs to be asked I believe that answer is yes.  I fully understand the severity of the ongoing financial crisis that erupted this past year. I am also fully aware of the need to take extraordinary action in such situations. From the rescue of Bear Stearns in March to the announcement of the bank equity purchase program in mid-October to two bailouts for AIG to the hundreds of billions extended to Citigroup, the U.S. government has indeed undertaken an extraordinary effort to calm financial markets. However, it is clear to me and many of my colleagues that Treasury accessing the remaining $350 billion will do little to fix the recession we are now in.  It is time for the U.S. government to cease announcements of new programs or plans designed to inject confidence in markets. Moreover, I think confidence would be better instilled by halting the announcement of new billion dollar programs designed to fix markets. I understand the need to move in accordance with changing conditions. I simply think the time has come to stop having the government try to fix markets. The markets are going to have to fix themselves. That is going to take some time, and it’s not a pleasant process, but we’re fooling ourselves if we think we can come up with some easy shortcut to solving these problems.   One of the major causes of this crisis was the accumulation of far too much debt on the part of some financial institutions. The U.S. government can make the same mistake. We are now anticipating an astounding $1.2 trillion deficit for this year alone – and that’s before any accounting of the roughly $800 billion stimulus proposal. This truly massive debt accumulation poses a serious threat to future stability and economic growth. We’re on track to have a budget deficit this year that exceeds the size of the entire federal budget only a few years ago. However, we can immediately make progress on reducing that deficit amount by not releasing the $350 billion. That is something that deserves sufficient debate.  Finally, as a fiscal Conservative, the thing that really concerns me about the $700 billion bailout is that it permanently changed the perception about what is “big” in big government from now on. What’s another $50 billion here, or $100 billion there, after we give $700 billion to banks? What’s the big deal with $1 trillion dollar deficits, or $800 billion stimulus packages, or multibillion healthcare proposals, or whatever plan is dreamed up around here to spend the taxpayers’ money once we gave $700 billion to an unelected bureaucrat with no oversight? We have completely lost our perspective.  I will close by noting the cost of the following defining events in the 20th Century of our shared history and compare them to the $700 billion bailout to hopefully bring a little perspective to the debate over the request for the second half of the $700 billion bailout: 

The Marshall Plan: Cost $12.7 billion at the time, it’s cost today: $115.3 billion
Race to the Moon: Cost $36.4 billion at the time, it’s cost today: $237 billion
Korean War: Cost $54 billion at the time, it’s cost today: $454 billion
The New Deal: Cost $32 billion at the time, it’s cost today: $500 billion (Est)
Vietnam War: Cost $111 billion at the time, it’s cost today: $698 billion
 

We simply cannot fast track a vote on the remaining $350 billion in this package.  Congress must actively debate sending any further funding under the original $700 billion authorization and exercise its institutional, and most importantly, its constitutional role to consider this program and have another vote.  My legislation, S. 64, would require another vote before any of the remaining $350 billion is available.  I think that is the only responsible action.   Keep in mind, my disgust with the whole $700 billion bailout is with the Bush Administration, and more specifically Secretary Paulson. But the Constitution is very clear about who has the power of purse in our system of government: that power lies with the US Congress. This Congress needs to reassert its Constitutional duty to have a say in how the money is spent. That’s what my bill, S.64, does. It simply says that Congress needs to have an affirmative vote on the plan for how this money is going to be spent. So let’s do our job and pass S. 64.  Who can argue with accountability?    ###



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