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Financial regulatory issues face Congress as session ends
by Senator Kay Bailey Hutchison
Published in the Fort Worth Star-Telegram September 23, 2008
Last month, I was privileged to travel throughout Texas to hear directly from residents about the issues that affect them and their families.
Texans shared with me their concerns about rising gas prices and slower economic growth. Those concerns have since escalated as Texas weathers the aftermath of a pair of storms — Hurricane Ike, which has caused billions of dollars in damage, and the intensifying financial storm that has rocked Wall Street.
On Sept. 14, investors were stunned by news that Merrill Lynch, a Wall Street fixture since 1915, was sold to the Bank of America to prevent the New York firm’s collapse. The next day, one of Wall Street’s oldest and most renowned institutions, Lehman Brothers, filed for bankruptcy. Listing $613 billion in debts, Lehman’s bankruptcy is the largest in U.S. history.
Days later, the American taxpaying public was stunned to learn that imperiled American International Group (AIG), a broad-reaching insurance firm operating in more than 100 countries, would be granted an $85 billion emergency bridge loan by the federal government.
On Sept. 19, Treasury Secretary Henry Paulson took the initiative to propose a comprehensive financial reform package.
The American taxpayer is already burdened by a $250 billion rescue of ailing mortgage giants Fannie Mae and Freddie Mac.
It is clear that the situation is worsening and will continue to affect the broader economy. We must focus our efforts on rebuilding our arcane and ineffective regulatory system. A balance of improved regulation and greater market discipline will help solve the financial crisis rather than patch it one bailout at a time.
Congress also has several other major items before this session ends.
We owe the American people a real solution to the energy crisis, which is burdening American families and small businesses with genuine hardships. I have helped lead the fight for legislation that would draw upon American resources and free-market ingenuity to produce more fuel, while also tapering our consumption.
Senate Republicans have proposed a bill that would repeal the congressional moratorium on deep-water oil and gas exploration and allow us to safely tap our own resources and increase American supply. In addition to drilling on American soil and off our own coasts now, we should exploit renewable fuel sources, and expand our portfolio of clean alternatives, like wind, solar, and nuclear energy.
Second, we need to pass extensions for key tax provisions that are set to expire later this year.
One of the most important components of this legislation would extend the state and local sales tax deduction. In 2004, I was able to get this deduction through the Senate and I will continue to try to make this deduction permanent.
The tax extender bill would also prolong the renewable energy production tax credit, which gives tax incentives for energy generated by wind facilities. Texas is the foremost wind energy producer in the United States and the extension of this credit will help us maintain our national leadership in this technology.
Last week, Congress did take positive action on a pair of critical issues.
First and foremost, we provided for those who fight to keep our homeland safe.
On Sept. 17, the Senate passed an expansive defense bill that strengthens our military by allocating resources for an additional 12,000 active duty troops for the Army and Marine Corps. The bill also gives members of the armed forces a well-deserved raise, effective Jan. 1.
Finally, Congress successfully replenished the Highway Trust Fund, which is the largest single source of funding for roads in Texas and across the nation.
The Trust Fund was running dangerously low, in part because of lower fuel tax receipts and needed expenditures on highway projects during the recent peak construction season. This legislation will prevent a 34 percent cut in highway and bridge investment nationally.
Without action, Texas could have expected nearly 30 percent less in highway maintenance and improvement funds for 2009 and 30,000 Texans could have lost their construction jobs.
During the limited time remaining in this legislative session, we have a full agenda before us. I am committed to making every minute of these final days count.
Republican Kay Bailey Hutchison is the senior U.S. senator from Texas and is chairwoman of the Senate Republican Policy Committee.
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