Trent's Blog
Lesson from AIG: Time to Stop the Bailout Stampede
Posted By: Rep. Trent Franks on March 18, 2009
Filed Under: Financial Sector Economy Federal Budget
TownHall.com
The doublespeak coming from leading Congressional Democrats and the Obama Administration has reached new heights this week. Taxpayers are rightfully outraged at reports that after financing hundreds of billions in federal bailouts, they are now also footing the bill for AIG executives receiving $165 million in retention pay and "performance-based" bonuses-- when many of these same executives are responsible for putting AIG in its untenable position in the first place.
The Administration is likewise expressing outrage over the AIG bonus payments, but this of course comes after White House Press Secretary Robert Gibbs assured the American people that the Administration knew how every dime AIG had received thus far had been spent. The White House continues to offer no explanation for the fact that these bonus contracts were on the books well before the most recent plan to award the struggling financial conglomerate with another $30 billion was announced.
To be clear, American taxpayers have financed AIG's bad investment and management decisions not once, but three times: first a $60 billion loan, then $50 billion to buy toxic assets, and then $40 billion to buy preferred shares of stock. And now, another $30 billion installment from the second half of TARP (Troubled Asset Relief Funds) approved earlier this year.
Then, Monday night, after most of the AIG bonuses had already been disbursed, Democrats began calling for a tax on the AIG executives who had received these hefty bonuses. Yet only a month ago, when the Senate considered the $787 billion stimulus bill, Senate Democrats passed an amendment by Senator Chris Dodd providing an exception for "contractually obligated bonuses agreed on before Feb. 11, 2009." That is, Senator Dodd and other Democrat leaders who are decrying the outrageousness of exorbitant executive bonuses were the very ones to guarantee that the bonus checks would be written.
Senator Dodd arguably wields more influence over the banking industry than any other Member of the U.S. Senate, as Chairman of the Senate Committee on Banking, Housing, and Urban Affairs. According to opensecrets.com, Senator Dodd was AIG's largest single recipient of campaign donations during the 2008 election cycle; and one of AIG's largest offices is based in Connecticut. The connection is stark: the Senator from Connecticut ensured executives were allowed to receive their exorbitant bonuses even at the expense of American people struggling to pay their bills and keep their homes.
It's becoming increasingly clear that both the elected and appointed Democratic leaders at the helm of the world's largest financial ship of state, responsible for navigating us out of a spiraling economic crisis, have forfeited the common sense and commitment to the principles of a free market -- the most basic of which is the freedom of business to succeed and the freedom to fail -- which have formed America's economic compass for over two hundred years.
Confidence in the ability of our national leaders to restore stability to our financial markets is the most crucial factor to encouraging the investment of private capital and incentivizing growth in our financial markets again. But with government leaders performing like this, one can't blame the markets for continuing to lose faith.
As for the executive bonuses, unfortunately these contractual obligations are binding and it remains unclear as to whether there is any clear and constitutional method for the government to recoup the $165 million it allegedly never intended to give to the AIG executives. Over two hundred years of common law precludes the imposition of retroactive taxation or a politically-motivated tax aimed at specific individuals, let alone the dangerous precedent that would be set by such action.
But hardworking taxpayers should not lose sight of the bigger picture. The unfortunate reality is that $165 million is a mere drop in the bucket when one considers that they are actually being left on the hook for nearly $200 billion in bailout funds AIG has been allocated at taxpayer expense.
The AIG bonus fiasco only signifies the much larger problem of government intervention in the private sector, whether in the mortgage industry, credit markets, or any other aspect of our free market economy. Those of us who have voted against each of the consecutive government bailouts starting in September 2008 cannot help but believe that our commitment to preserving the principles of our free market has now been vindicated.
If we're to effectively "plug the holes" in the deflating balloon of consumer confidence, the Democratic leaders in government must commit to returning to the simple principles of personal responsibility, transparency, and integrity which they're demanding of everyone else, whether individuals or financial giants like AIG. Looking forward, the only viable response to incentivizing real economic growth and bringing true stability to our ailing financial markets absolutely must include an exit strategy for the growing government monopolies of private financial assets.
Rep. Franks defends Arpaio, sheriff blames mayor
Posted By: Bethany Haley on March 16, 2009
By KTAR
There are two federal inquiries into Sheriff Joe Arpaio's illegal immigration policies and one Arizona congressman said he knows why.
"They feel like that if they can take him out and do him damage or intimidate him, they end up intimidating the whole specter of law enforcement that deals with illegal immigration," says Republican Rep. Trent Franks.
Franks said it's vital that Arpaio continue his tough stance, especially now that Phoenix is the kidnapping capital of the U.S.
He said the sheriff's opponents are backwards in their thinking.
"I'm just sort of astonished that we keep seeing this trend on the part of the Judiciary Committee especially under the Democratic control here, where they are seemingly more committed to going after the good guys than they are the bad guys."
Frank said there's nothing unlawful or inhumane about Arpaio's raids.
The Justice Department is also going to investigate Maricopa County Sheriff Joe Arpaio's office for possible racial profiling.
Arpaio told KTAR's Jay Lawrence he's not worried.
"They say they're coming down. You know, my doors are open. We do not racial profile."
Arpaio accused Phoenix Mayor Phil Gordon of having a hand in the letter that informed him of the investigation "which by the way, Gordon was there at the same time talking to these people. He probably prepared the letter, but that's another issue. It will come out."
"We're going to survive this. It's just another blip in the 17 year career of the sheriff."
Justice Department’s new tone puts Sheriff Arpaio in hot seat; D.C. leaders now more likely to hear profiling complaints
Posted By: Bethany Haley on March 15, 2009
By Dan Nowicki
The Arizona Republic
Few are feeling the change that President Barack Obama has brought to Washington more acutely than Maricopa County Sheriff Joe Arpaio.
Not yet two months into the Obama administration, the veteran Republican lawman finds himself under investigation by the Justice Department following complaints that his office employs unconstitutional practices in enforcing immigration laws. On Capitol Hill, a high-profile congressional committee is preparing to hold an investigative hearing into whether Arpaio’s operation discriminates against Latinos. And, based at least partly on Arpaio’s record, the Homeland Security Department is revising the rules of the federal program, known as 287(g), that gives federal immigration-enforcement authority to Arpaio and other local officials around the country.
The controversial and popular five-term sheriff chalks the probes up to politics. But others say a renewed focus on civil rights has prompted the scrutiny.
Attorney General Eric Holder made it clear in his Senate confirmation hearing that he intended to make safeguarding civil rights a priority again. Holder’s previous tenure at the Justice Department, as a deputy attorney general during President Bill Clinton’s administration, was marked by a keen attention to police racial-profiling complaints.
Racial-profiling complaints were virtually ignored during President George W. Bush’s eight-year term. And the Justice Department’s inspector general recently blistered the Civil Rights Division for the unlawful politicization of personnel actions during the Bush era. Laura Sweeney, a Justice Department spokeswoman, declined to characterize the Arpaio inquiry as the administration’s first major probe, saying that would be “a bit subjective.” She confirmed that the Civil Rights Division has opened other investigations since Holder took office.
“Both in tone and in content, the Department of Justice’s Civil Rights Division has changed dramatically,” said Paul Charlton, who was U.S. attorney for Arizona from 2001 to 2006 and now represents Maricopa County Supervisor Don Stapley in a criminal case brought by Arpaio and Maricopa County Attorney Andrew Thomas. Stapley maintains he is innocent of the charges, which relate to real-estate and business deals that prosecutors allege were not properly disclosed.
One outside expert doubted that Arpaio is the victim of political persecution by the Civil Rights Division, particularly in light of the report that exposed politics-related abuses in the Bush Justice Department. The findings, based on a joint investigation by the department’s Office of the Inspector General and Office of Professional Responsibility, were made public in January.
“There is an increased sensitivity to wanting to have a Civil Rights Division that is active but not politically influenced,” said Rebecca Lonergan, a former assistant U.S. attorney and Justice Department insider who is now an adjunct assistant professor at the University of Southern California’s Gould School of Law. “I do not believe that they would be dumb enough to open this investigation as a political decision. It would be extremely bad timing.”
A political target?
Critics of Arpaio and his illegal- immigration-related crime-suppression sweeps and workplace raids are cheering the shift in the political winds.
“Our sense is that finally - finally - there is reception in Washington,” said Monica Sandschafer, state director of Arizona ACORN, a chapter of the Association of Community Organizations for Reform Now. “Finally there is an administration that is interested in holding people accountable for the Constitution and the rule of law.”
But Arpaio suggests he is a political target of Democrats, saying that by vilifying him as a racial profiler, they are trying to achieve a larger goal of scrapping or radically altering the 287(g) program. The program was created under Clinton but wasn’t promoted until after the Sept. 11, 2001, terrorist attacks, during the Bush administration.
The Democratic Obama administration, Arpaio said, gives new clout to the sheriff’s political foes such as Phoenix Mayor Phil Gordon, who nearly a year ago asked for a federal probe of the sheriff, and Maricopa County Supervisor Mary Rose Wilcox. Obama’s Homeland Security secretary is Janet Napolitano, who, even if not directly involved, can provide the Justice Department with valuable institutional knowledge about Arpaio based on her experience working with him in Arizona in her previous roles as U.S. attorney, state attorney general and governor.
It’s understandable that the Justice Department is feeling pressure from the various politicians clamoring for action, Arpaio said.
“Everyone who is making an issue is a Democrat,” Arpaio said. “The big problem is the 287(g). I’m the most active (participant), the largest with 160 officers, and they’re using me as a poster boy.
“They’re using me as a catalyst to make an issue of this, hoping that they can get something on me and my deputies on racial profiling so they can say, ‘See what happens under 287(g).’ ”
Arpaio also is drawing criticism from the Democrat-controlled House Judiciary Committee, where partisanship often flares. But here, too, observers say Rep. John Conyers Jr., D-Mich., the panel’s chairman, is motivated by a long-term commitment to civil rights. Conyers, like Holder, is Black.
“I don’t think you can discount the importance of race here. Conyers is an old civil-rights veteran,” said Rodolfo Espino, an assistant political science professor at Arizona State University. “You have two African-Americans looking at this who are very cognizant of civil rights and what African-Americans went through.”
Hearing in April
Sandschafer and Alicia Navejar, another Arizona ACORN leader and Arpaio critic, were in Washington on Wednesday as Conyers announced that he will hold a hearing on Arpaio in April. The development came the day after the Justice Department probe was revealed. Conyers previously had urged Holder and Napolitano to investigate Arpaio.
Navejar was energized after speaking at the Conyers news conference, saying she hopes Arpaio is “taken to justice.”
“I was just so excited to be part of something that is going to make a difference to not only just one person or two people but to thousands of lives,” said Navejar, a naturalized U.S. citizen who lives in Phoenix. “I can see what it has done (to Latino families).”
Yet Arpaio’s immigration crackdowns are wildly popular, and he was re-elected in November by a wide margin.
Rep. Trent Franks, R-Ariz., a Judiciary Committee member, worries that hearings will exploit racial fears for partisan political gain.
“I think they would like to try to paint all Republicans as racist and motivated by things like racial profiling,” Franks said. “I have not seen one iota of evidence that the sheriff has done anything but enforce the law on the basis that he is trying to protect the people within the county he serves.”
Franks echoed Arpaio’s suggestion that the 287(g) program is a target. “A big goal of the liberal Democrats in Congress is to try to do away with any effective cooperation to enforce federal immigration laws,” he said.
House and Senate Republicans Working on a 'Bolder, Clear' Budget
Posted By: Bethany Haley on March 13, 2009
By Brian Darling
Human Events Online
HIGHLIGHT:
The elements of a conservative budget plan are being compiled by the conservative House and Senate leaders.
Congress is commencing a debate on the President's $3.6 trillion budget. It represents efforts by the left to radically expand the size and scope of the federal government. President Barack Obama said last week that each generation of Americans has "found the capacity to not only endure, but to prosper -- to discover great opportunity in the midst of great crisis." Our nation is in great crisis, and conservatives need to ensure that President Obama doesn't use the current economic crisis as an opportunity to dramatically expand government.
Last week, House Republican Conference Chairman Mike Pence announced that House Republicans would offer a "bolder, clear" alternative to Obama's enormous budget. As Americans cut back on basic necessities, Congress has a moral obligation to bring government spending back to its historical norm. Congress also has a moral obligation to prohibit funding for many dangerous policy ideas put forth by our president, including efforts to ration healthcare, to destroy life through embryonic stem cell research, and to tax energy production in the name of climate change. House conservatives don't have to look far for good ideas. The elements of a conservative budget plan are being compiled by the conservative House and Senate leaders. A responsible budget would dramatically lower taxes on job creation and investment, using Sen. Jim DeMint's (R-S.C.) bill titled "The American Option" as a model. The conservative budget plan would streamline a cumbersome regulatory process and allow Americans access to their large supply of domestic fuels using Sen. David Vitter's (R-La.) and Rep. Rob Bishop's (R-Utah) bill titled the "No Cost Stimulus Act" as a template. It should also commit at least 4% of GDP to defense needs, as Sen. Jim Inhofe (R-Okla.) and Rep. Trent Frank (R-Ariz.) have proposed. They must restrain entitlement spending. In doing so, they should outline the path towards a restrained budget and ultimately show the American people how we slow our massive national debt.
The top Republican on the House Budget Committee, Paul Ryan (R-Wisc.), has laid out a detailed plan called "A Roadmap for America's Future." His plan addresses the entitlement crisis while strengthening Medicare, Medicaid and Social Security. It returns federal spending to sustainable levels and take steps to minimize the debt future generations will inherit. Finally, it seeks to make America the leader of the global marketplace by reforming our tax code. Americans deserve a respon-sible budget that gets America's fiscal house in order. Such a budget will contain many hard choices and be a target rich environment for those on the left who wish to politicize our country's future. Welfare Reform Under Attack The House Republican Study Committee (RSC) team members Tom Price (R-Ga.) and Jim Jordan (R-Ohio) have introduced legislation to repeal a provision in the so-called "stimulus" bill that removes elements of the 1996 welfare reform law. According to the RSC, since enactment of the 1996 welfare reforms, welfare caseloads have fallen by 65%. The reforms removed a system where states would receive federal increased federal funding as they increased the amount of people on welfare.
According to my Heritage Foundation colleague Robert Rector, "the stimulus bills will add nearly $650 billion in new means-tested welfare spending over the next decade. This new spending amounts to around $18,500 for every poor person in the U.S. The cost of the new welfare spending amounts, on average, to over $8,500 for each family paying income tax." The Price bill will repeal a $5 billion "emergency fund" for the Temporary Assistance for Needy Families (TANF) program including incentives to states that promote the expansion welfare caseloads. Paid Volunteerism This week, the House may consider a bill to expand AmeriCorps, SeniorCorps and creates a VeteransCorps that will cost you about $97 million next year. Sens. Ted Kennedy (D-Mass.) and Orrin Hatch (R-Utah) are pushing a similar measure in the Senate. These so-called volunteers, in addition to being paid a salary, would receive $5,350 to put toward educational costs. The problem is that an expansion of government in this arena crowds out private sector and charitable efforts for true volunteerism. Conservative Cheers and Jeers Conservative cheers to South Carolina Gov. Mark Sanford for rejecting $700 million in stimulus funding. He may be joined by Louisiana Gov. Bobby Jindal and Mississippi Gov. Haley Barbour because too many strings are attacked to the federal monies. Conservative jeers to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid for a profanity laden yelling match overheard by many during the debate over the omnibus spending bill. The Politico reported that "the heated, sometimes profane, exchanges were described as 'ugly' by Democrats on both sides of the Capitol."
House Conservatives seek Patriot Act Extension
Posted By: Bethany Haley on March 12, 2009
By Jared Allen
The Hill
ore than a dozen of the GOP’s most conservative members on Thursday introduced a bill to reauthorize controversial Patriot Act provisions set to expire later this year.
The group of House Republicans – who include Whip Eric Cantor (R-Va.), Conference Chairman Mike Pence (R-Ind.) and Judiciary Ranking Member Lamar Smith (R-Texas) – want to extend for an additional 10 years the ability of national security agencies to conduct “roving” wiretaps, have access to library patron information and greatly expand the reach of the Foreign Intelligence Surveillance Act.
Those provisions of the Patriot Act were set to expire this year.
“If there’s one thing we can predict about terrorism it’s that it’s unpredictable,” said Smith, the lead sponsor of the Safe and Secure America Act of 2009. “That’s why law enforcement and intelligence officials must remain vigilant.”
“The national security provisions we’re seeking to reauthorize are proven and effective,” Smith continued. “They have helped investigators track down terrorists and prevent attacks.”
Those provisions in particular drew the ire of liberals and privacy groups who said they trampled on Americans' civil liberties.
But the GOP members who introduced the reauthorization bill shot back that the threat of domestic terrorism is still as real as it was eight years ago.
“Critics of these provisions claim that the terrorist threat has diminished since 2001,” Smith said. “But such claims ignore the deadly attacks in London, Madrid, Mumbai and Yemen. If we want to keep Americans — both here and abroad — safe and secure from future terrorist attacks, we need to extend these provisions.”
Minority Leader John Boehner (R-Ohio) did not sign on as an original cosponsor.
“I’ve not seen the proposal,” Boehner told reporters Thursday. “But the Patriot Act is a part of helping to keep America safe and we’ve got to do everything we can in this time of economic crisis to protect our citizens from those who’d want to harm us.”
Those House Republicans who joined some GOP leaders to introduce the bill include: Judiciary Committee Members: Rep. Jim Sensenbrenner (R-Wis.); Rep. Howard Coble (R-N.C.); Rep. Elton Gallegly (R-Calif.); Rep. Daniel Lungren (R-Calif.); Rep. Steve King (R-Iowa); Rep. Trent Franks (R-Ariz.); Rep. Jim Jordan (R-Ohio); Rep. Tom Rooney (R-Fla.); and Rep. Gregg Harper (R-Miss.); and GOP Reps. John Sullivan (R-Okla.); Rep. John Shadegg (R-Ariz.); Rep. Duncan Hunter (Calif.); Rep. Michelle Bachmann (R-Minn.); and Rep. Mary Fallin (R-Okla.).
