Last week, the U.S. Treasury released the Fiscal Year 2008 Financial Report of the U.S. Government.

According to a Treasury press release:

"Revenue results in this year’s Financial Report were $2.7 trillion, increasing slightly by $34 billion or just over 1 percent, compared to last year. Total costs were $3.6 trillion, an increase of $.7 trillion or 25 percent compared to last year. Net operating cost increased to $1 trillion, up from last year’s net operating cost of $275.5 billion."

During the last session of Congress, I introduced H.R. 3958, the Truth in Accounting Act, which would require the Treasury to calculate the long-term budget figure in this report to create greater transparency in the budgeting process and provide a more accurate assessment of our nation's real financial standing.

It would do this by requiring the Treasury to include a program-by-program calculation of : (1) the generational imbalance; (2) the fiscal imbalance; and (3) the total amount of the fiscal imbalance plus the public debt. The President, in preparing the federal budget, would then have to take this financial statement into consideration, including the effect of the overall budget upon: (1) the generational imbalance calculation and the fiscal imbalance calculation; and (2) the net present value of the overall fiscal exposures of the federal government.

In other words, our government would have a more accurate number from which to work when creating the federal budget, which could hopefully help to avoid irresponsible spending. In the not-so-distant future, our nation will be faced with making essential reforms to large domestic programs, like Medicare and Medicaid, to make them fiscally sustainable. However, we can’t do this responsibly without an accurate forecast of not only the short-term, but also the long-term financial standing of our nation. If we don’t get a grip on our finances, we will continue to spend more than we have. And our children will pay the price.

It’s no secret that when President Obama gets sworn into office, among his top priorities will be to guide Congress through an $850 billion economic stimulus package. As a result, this astronomical number has created a tsunami of activity from special interest groups looking for their piece of the pie. $850 billion is simply an astonishing figure - not only exceeding the hefty $700 billion price tag of the financial sector, but also dwarfing the annual budget for the Pentagon.

What does Obama intend to do with all of your hard-earned money? According to today's Washington Post, the 850 billion "would include at least $100 billion for cash-strapped state governments and more than $350 billion for investments in infrastructure, alternative energy and other priorities..."

You've got to wonder if the infrastructure investments that Obama is going to include in his package might come from the list of 11,391 projects that the U.S. Conference of Mayors recently submitted to Congress.  The list includes things like a $4.8 million polar bear exhibit at the Providence, RI zoo and a $1.5 million water ride in Miami, FL. 

According to a recent CNN article, other abuses of taxpayer dollars found within the report include:  "a proposed $20 million minor league baseball museum in Durham, North Carolina; $6.1 million for corporate jet hangars at the Fayetteville, Arkansas, airport; $20 million for renovations at the Philadelphia Zoo; and a $1.5 million program to reduce prostitution in Dayton, Ohio."

If nothing else, the next four years look to be a spending bonanza and a pork barrel free-for-all. Hold on to your wallets!

A front page story in Thursday's USA Today newspaper caught my attention:

Late Wednesday night, Congress passed the Auto Industry Financing and Restructuring Act.  Like bailouts in the past, I firmly opposed it, as it offered no assurances that it would fix the failing business models that put the Big Three in this position to begin with, while offering no protection for the taxpayer's investment.

Last night's vote proved that the Bush White House and Democratic leadership are working lockstep to put taxpayers on the line for another irresponsible bailout without making the necessary structural changes and without renegotiating labor contracts. Throwing taxpayer money at Detroit's spiraling problems will not fix their long-term management and productivity troubles and they will only be back for more time and time again.

My Republican House colleagues and I presented an alternative to help the American automakers stabilize their industry while they execute long-term restructuring and reorganization.  That alternative would set hard benchmarks for reducing their debt and renegotiating money-pit deals with Big Labor and would set up the financial assistance as interim insurance instead of a taxpayer-financed bailout.  Unlike the proposal Congressional leadership has brought before Congress, which essentially nationalizes the auto industry, this alternative would maintain an outlet for private investment in the American automakers. 

However, Democratic leadership dismissed consideration of alternative proposals that could truly restructure these companies over the long-term and help them rein in costs.                                                                  

Late Tuesday night, the White House and the Congressional Leadership reached a general agreement on a $15-billion bailout bill for the auto industry. There are still some points that reportedly need to be worked out, and some Senate Republicans remain reluctant to support the package, which could threaten its passage by that body.

But, from what we've seen of the bill so far, here's a quick overview:

*       Calls for a $15 billion package of short-term loans for U.S. automakers taken from the Dept. of Energy “retooling” loan program already signed into law.   (Few recall that Congress already passed a $25 billion loan program for the automakers in September.)

*       Includes a provision that would ALLOW the government to demand early repayment of the loans if the firms were not making adequate progress toward reinventing themselves. This is an option, not mandatory.

*       Allows the President to choose whether to appoint a single administrator — referred to as a “car czar” — or a board of Cabinet officials to oversee the loan program. 

*       Speaker Pelosi has conceded to WH demands that any bailout come from an Energy Dept. loan program already passed for the auto industry, not TARP.  However, she has stated that the bill must specifically include provisions to replenish the retooling program -- and do so within weeks.   Furthermore, she's been quite vocal about her expectation that Congress will have to send additional funds to Detroit in the new year.  Speaker Pelosi hasn't hidden the fact that she considers this just a first step in Detroit's bailout.

*       Speaker Pelosi wants the package to include a provision prohibiting the Big Three from opposing state fuel emissions rules.  Basically, they'd have to drop their lawsuits in CA and elsewhere against state emissions laws that require the automakers to meet standards that are certainly not cost effective and often not even technologically feasible.                                                                                      

Senate Republicans are right to question the plan's ability to put the Big Three automakers on a viable, sustainable path that protects the taxpayer’s investment. The underlying problem in all this is that the law already provides for judicial oversight of such matters in the bankruptcy courts.  What is being proposed here is that the government make special concessions to the auto industry to walk them through a special bankruptcy program administered by a 'car czar,' rather than a judge as in a normal bankruptcy case. Our government will have a controlling stake in yet another significant portion of our economy.

I understand that our nation’s auto companies are hurting, but the last thing these companies and our economy need is a multi-billion-dollar bailout that does nothing to reform the failing business model that put them in this position in the first place.

For instance, GM is drowning under the high costs of their employee benefits. Due to the negotiation of long-term retirement and health packages, GM currently supports more retired employees than present employees. Because American automakers’ costs are so much higher than their competitors- an estimated $2000 more per car- their competitors are able to put in more extras without pricing their products out of the market. It's not that no Americans are buying cars; it's that foreign companies are producing cars that Americans want to buy.

Senator Voinovich, an Ohio Republican who has been a strong advocate for an auto industry rescue, summed up our concerns over the proposed plan the best:“One of my concerns is that this bill doesn’t go far enough to secure viability plans from the auto companies that would best ensure that the money will be paid back to the taxpayers."

I'll keep you posted as things develop throughout the day and week.  

If you haven't applied for your bailout yet, what are you waiting for? The way the government's handing out money, why not jump on board the bailout train?

The World Newser, ABC World News' Daily Blog does a great job detailing how the Treasury Department is using the recently passed $700 billion appropriated for the "TARP," or Troubled Asset Recovery Program, to buy up bank stock.  As you will recall, Congress was sold on the bailout as a plan to buy up troubled assets, but that plan appears to be on a far back burner. That's one heck of a bait-and-switch.

Secretary Paulson even said on Wednesday that when the $700 billion bailout bill was signed into law he knew that purchasing troubled assets wasn't the right solution to the problem.

Remember the "urgency" to pass a bailout bill to buy up troubled assets or else face economic ruin the likes the world has never seen? Good thing we rushed to pass a bill on premises that we now know were wrong from the very start.

I voted against both versions of the bailout bill that came before the House of Representatives because they did nothing to address the fundamental root of the crisis, and that was the credit crunch. But the bill is now law, and America is paying for it dearly.  And, our children will pay still more dearly for it.

AIG hit us up for $85 billion in September, but apparently that wasn’t enough because they recently hit the taxpayer up again, upping the ante to $150 billion. And now the auto industry is knocking on the door for their next bailout. Could the airline industry be next? There is no end in sight and no rationale to determine who is and who is not deemed credible to be "bailed out." There is no oversight, and no accountability.  And, taxpayers deserve better.

Last Thursday, the Washington Times published an op-ed I wrote about the effects of the $700 billion bailout bill passed by Congress a few weeks back.

Whether you agree or not that the bailout bill was the way to go, there are many issues that still need to be addressed to get our economy back on track. For instance, the bill did nothing to address the underlying problem affecting our economy, and that's the credit crunch.

I hope you'll take a few minutes and give it a read.

"Recently, in a series of incredibly bold moves over the course of a week, the Federal Reserve and U.S. Treasury took historic steps to intervene in the American economy. And, the American public barely batted an eye.

"First, the Fed took the nearly unprecedented step of buying up unsecured debt. While the Fed hasn't announced how much commercial paper it would buy through this program, it did say it would be "substantial" and that $1.3 trillion of the $1.75 trillion in outstanding commercial paper comes from eligible issuers."

Read the full op-ed

I, along with 28 other members of the House Financial Services Committee, have sent a letter to the Committee's Chairman Barney Frank, urging him to invite former executives of Fannie Mae and Freddie Mac to testify at the scheduled hearing on October 21 on restructuring and reform of the financial system.

I've also requested hearings on alleged abuses by the Association of Community Organizations for Reform Now (ACORN), which receives significant funding from Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development and has made many headlines in recent weeks for alleged election fraud.

Last week, I voted twice against the nearly $1 trillion Wall Street bailout bill in the U.S. House. The first bill (with a $700 billion price tag for taxpayers) failed with an overwhelming bipartisan majority.  Then the Senate passed a second version that was loaded with tax "sweeteners" in an attempt to attract enough lawmakers in the House who voted "Nay" the first time around to switch their vote to pass the bill. That jacked the price tag up to $810 billion.  You've got to love Washington.

We were supposed to be voting on a financial bailout bill, but unfortunately we got much, much more.

Taxpayers for Common Sense have listed their Top 10 Tax Sweeteners in the recently passed Bailout Bill. As the organization notes, not all of these are outrageous on their own, but when we are supposed to be voting on a bailout package that is already putting the American people further in debt, these extras are the last thing that should be thrown into the mix as political currency to attract votes. They should have been dealt with at another time.

1.) Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children ($2 million)

2.) Sec. 317. Seven-year cost recovery period for motorsports racing track facility ($100 million)

3.) Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands ($192 million)

4.) Sec. 301. Extension and modification of research credit ($19 billion)

5.) Sec. 504. Income averaging for amounts received in connection with the Exxon Valdez litigation ($49 million)

6.) Sec. 601. Secure rural schools and community self-determination program ($3.3 billion)

7.) Sec. 201. Deduction for state and local sales taxes ($3.3 billion)

8.) Sec 502. Provisions related to film and television productions ($478 million)

9.) Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds ($148 million)

10.) Sec. 309. Extension of economic development credit for American Samoa ($33 million)

Check out Taxpayers for Commonsense for more information on these provisions and several others.

The bailout bill that the U.S. Senate passed late Wednesday night is not the remedy for what ails this nation's economy. While we are all anxious to take action to help America recover from it's current financial crisis, it does us no good to pass a bill that does not address the underlying problem before us, and that's the credit crunch.

After the defeat of the original proposal in the House on Monday, Congress had an opportunity to really address some of the shortfalls of the failed bill. Instead they loaded on millions of dollars in pork barrel spending and a couple of other "treats" to lure members of Congress who voted "Nay" the first time around to reconsider their vote. From tax incentives to mental health parity (which, by the way, deserve their time to be considered and voted upon), they should not be strategically placed into a bill of this magnitude that is supposed to specifically address the credit crunch facing our nation. It is irresponsible, and proof enough that Congress deserves its 10% approval rating. Instead of being a source of calm in the eye of a storm, a good many lawmakers have lost their good sense and jumped overboard to back a bill that does nothing to really address our current financial crisis, other than give Americans a false sense of economic security.

There are simple steps that we can take to make the problem in front of us much smaller, and much easier to handle. The Free Market Protection Act (H.R. 7223) is an alternative economic rescue plan that puts us on a better path to attack the roots of the current crisis. Among other things, it would suspend the capital gains tax, schedule the government-sponsored enterprises (Fannie Mae and Freddie Mac) for privatization, and suspend mark-to-market accounting requirements.

Take a look at it in more detail here .

And, there are steps that the SEC, FDIC, and FASB can take already within their regulatory authority to make a real difference.

We must be calm, and while we should work speedily, we must not work hastily. Sadly, the bill passed by the Senate that is now in the House is a result of the "urgent" need to pass "something," rather than the "right thing."

 

Yesterday, Congress voted on what is arguably the single most important issue facing our country today.  A $700 billion, taxpayer-funded Wall Street bailout package was presented for a vote with absolutely no opportunity for debate or consideration of alternatives.  Every Member of Congress who spoke on the floor, every Administration official involved in the negotiations on the package, and every commentator has said that this is a bad package.  Many of them, however, have said that Congress had no alternative but to pass it.

I disagree, and so did a solid bipartisan majority of the House of Representatives who voted against this package.  Congress must sit back down and demand that the Bush Administration take into consideration some of the very valid alternatives being discussed.  There is no reason that Congress needs to rush into passing a bad bill that would saddle generations with debt.  The American people deserve a more thoughtful response.

Check out an alternative proposal to which I'm a co-sponsor of here.

For anyone trying to submit an email to a Member of Congress, the U.S. House is limiting e-mails from the public to prevent its websites from crashing due to the enormous amount of mail being submitted on the financial bailout bill. 

As a result, some constituents may get a 'try back at a later time' response if they use the House website to e-mail their lawmakers.

We apologize for the inconvenience, and you're encouraged to call our Washington or Minnesota offices with comments or questions.

Washington, DC: 202-225-2331
Woodbury, MN: 651-731-5400
Waite Park, MN: 320-253-5931

Thanks for your patience.

Yesterday, I joined several House colleagues to urge the Democrat controlled Congress, the Treasury, and the Federal Reserve to act with greater transparency and responsibility for the taxpayer when it comes to the financial markets crisis rattling our nation.

Check out the Wall Street Journal's Market Watch coverage of the press conference here.

Taxpayers must not be left on the hook to the tune of billions of dollars -- possibly in the ballpark of $500 billion -- in government-backed bailouts. If government is propping up Wall Street and taxpayers foot the bill for the government, that makes Americans the last line of insurance in these unstable financial times.

The question becomes:  Who will left to bail-out the taxpayer who is already saddled with a debt of about $455,000 per household just for runaway entitlement spending?

The government is embarking on a very dangerous path, and the recent financial takeover of AIG Insurance is an action we must not be quick to replicate. Privatizing reward and socializing risk is essentially rolling the dice with our nation's financial security and it is a surefire recipe for disaster for our economy.

If we bail out one, another lines up for their hand out, then another, and another, and another. If this keeps up, everyone from Starbucks to JC Penney's will see themselves as too big to fail and they too may be knocking on the doors of the Treasury looking for their bail-out.

Investor's Business Daily had a great editorial on this issue yesterday, too.  Check it out here.

With the recent news of the Fannie and Freddie takeover, it is vital that we take steps to ensure that taxpayers are protected as Treasury Secretary Henry Paulson and Director of the new Federal Housing Finance Agency (FHFA), Jim Lockhart, launch their four part plan to stabilize the two mortgage giants.

On one hand, I’m satisfied that the FHFA is acting swiftly to secure the GSE’s, and is incrementally doing so to maximize American taxpayer protection. However, we must all be concerned and keep a watchful eye on the plan as it moves forward to ensure that already struggling taxpayers are not left footing the bill for this multi-billion-dollar bail-out program.

While monitoring the plans progress, it is vital that we reform the institutions so that the same thing doesn’t happen again in the future. I believe that once Fannie and Freddie are ready to be released from government control, they should be privatized. Similar to Ma Bell, we should break up the GSE’s and have smaller, privatized mortgage companies. By doing that, we will ensure that we do not go through this exercise in the years ahead. The bottom line is that the taxpayer must be fully protected while we work to stabilize the market.

Cross-posted at The Hill's Congress Blog

Today, the Democrat majority in the House of Representatives got their wish. By a mere one vote (213 to 212), the Democrats will be able to sneak out of Washington for the entire month of August without doing anything to address our nation's sky-rocketing energy prices. Just 17 Democrats broke ranks with Speaker Pelosi and joined the 195 Republicans in voting against this measure, but we still fell one vote short.

With gas prices over $4 a gallon, the Democrats have voted to give themselves a vacation at the same time gas prices are preventing Americans from taking vacations of their own. And some around here wonder why Congress' approval rating is at 9%. 

The July 28th issue of Time Magazine showcased a rather scathing essay lambasting the inaction of the 110th Congress entitled, Throw the Bums Out.

"The 260 laws passed by the 110th Congress represent a 30-year low, and they include the naming of 74 post offices, not to mention the nonbinding resolutions designating July National Watermelon Month and recognizing dirt as an essential natural resource. Approval of Congress has sunk to a record low: 9% of people in a Rasmussen poll think lawmakers are doing a good or excellent job. The happiesth news in this for the Democrats running the place is that about 40% of voters think the Republicans are still in charge."

Let me tell you something:  If the Republicans were in charge, we’d be taking action to tap into American energy resources and cut the price of gas now. 

The Democrats are demonstrating politics at its worse. Rather than acting now on crucial issues like energy reform, they're simply going through the motions, pointing fingers and playing political games.  And, they’re skating by unscathed:  As this essay points out, most Americans wrongly believe that Republicans are still in charge.

We can act now to bring energy costs down, but sadly the Democrats have chosen political posturing over political action.