Friday, October 03, 2008

Congressman Mitchell's response to the letter on the bailout

A few days ago, I wrote a letter to Congressman Harry Mitchell concerning the Wall Street bailout proposal floated by the Bush Administration.

Congressman Mitchell voted against the original proposal (which failed) and voted in favor of the revised bill.

The Congressman's response, via email -

Dear [cpmaz]:

Thank you for contacting me regarding H.R. 1424, the economic recovery package.

The current economic crisis extends far beyond Wall Street or Washington. It affects us all. If the credit market freezes, then it is going to become dramatically more difficult for anyone to borrow money to purchase a home or a car, or to send their kids to college. Businesses, large and small, will be cut off from the credit they need to stock their shelves and make payroll.

Throughout consideration of this rescue package, I believed that both parties needed to come together to forge a compromise that would protect taxpayers and promote investor confidence. For this reason, I opposed the blank check proposed by Treasury Secretary Paulson. And, with less than 24 hours for deliberation and public comment, I voted against H.R. 3997, a modified proposal that House Leaders rushed to the floor on September 29, 2008, and failed by a vote of 205 to 228.

After the House of Representatives rejected these hasty proposals, members of both parties worked together to make significant improvements to this legislation.

H.R. 1424 authorizes the U.S. Department of Treasury to begin an aggressive program to restore liquidity to our nation's credit market. Specifically, it authorizes the Department Treasury to begin buying and re-selling certain mortgage backed securities that are currently preventing lenders from issuing credit. Unlike the lump sum $700 billion pay out in the Paulson plan, the legislation provides the Secretary with an initial $250 billion, followed by another $100 billion upon a Treasury Department report to Congress. The Secretary could then request up to an additional $350 billion, however, Congress will be given 15 days to vote to stop this from happening if it does not approve of how the Secretary is managing the rescue plan, or does not want to commit additional taxpayer funds to it.

I am not happy with everything in the new bill, especially the earmarks that the Senate snuck into the bill at the last-minute. This is precisely the kind of legislating that makes the public so distrustful of Congress and so suspicious when they are asked to support an important economic rescue package. This is disappointing on many fronts, particularly because I spent nearly three decades teaching government at Tempe High School, and I am certain that this is not how our political process was intended to function.

However, inaction would cripple our economy.

To its credit, the new package includes improvements to protect taxpayers and promote investor confidence.

It increases Federal Deposit Insurance Corporation ("FDIC") and National Credit Union Administration ("NCUA") insurance limits to $250,000. This is not only important protection to individual depositors, but also to small businesses that keep payrolls in banks and credit unions and need to know these funds are secure. This provision was not included in the Paulson plan or the first bill brought to the House on September 29.

In addition, unlike the Paulson plan, H.R. 1424 puts a stop to so-called "golden parachutes" - extravagant exit bonuses to executives who leave companies that may have had a hand in creating the current crisis.

Also, unlike the Paulson plan, H.R. 1424 will protect taxpayers by making sure that the recovery program is subject to oversight and judicial review. Four separate entities will provide constant oversight to ensure efficiency and fairness in the Troubled Assets Relief Program ("TARP"). This program will buy and re-sell assets from distressed companies, and new provisions for recoupment ensure that costs from the program are not passed on to taxpayers.

The new package will also help many homeowners in danger of foreclosure by allowing the government to work with loan servicers to re-structure mortgages.

Significantly, the new package includes a recoupment provision, which requires the President to submit legislation to Congress in five years to begin recouping any losses incurred by the federal government as a result of TARP from the financial industry in order to make taxpayers whole.

Finally, the new package will extend key tax credits to encourage investments in alternative energies like solar. Right here in Arizona, APS and Abengoa are planning to build the world's largest solar power plant - big enough to power 70,000 homes. Without these tax credits, it will not happen. These investments will be taken overseas. Now, the investments spawned by these tax breaks will help drive our economy forward by creating thousands of jobs and producing more than $4 billion worth of energy over the next 30 years.

I am disappointed that the final package did not extend important cuts to capital gains and estate taxes. These cuts are set to expire and I think the last thing we want to do is have investors worried about a tax increase. Last year, Representative Christopher Shays and I introduced H.R. 3170, Capital Gains and Estate Tax Relief Act, to make these cuts permanent, and I believe that the inclusion of this legislation would have encouraged investment and provided important certainty to our tax code.

However, with an economic disaster looming, I believe we had a responsibility to act. The final package was approved by the U.S. Senate on October 1, 2008 by a 74-25 vote. I voted for, and the House passed the economic package two days later by a bipartisan vote of 263 to 171. The President signed the legislation into law the same day.

Again, thank you for taking the time to write to me about our economy and the government's economic recovery package. Please do not hesitate to contact me in the future if you have additional comments or concerns.

If you would like to receive e-mail updates about how I am working on behalf of Arizona's 5th Congressional District, I invite you to sign up for my newsletter at


Harry E. Mitchell
Member of Congress


I haven't actually looked at the revised bailout package, but while it sounds to be a much better package than the original one, I'm still hesitant about anything with a price tag in excess of $700 billion dollars.

Especially when the primary beneficiaries (though not the *only* beneficiaries) are Wall Street CEOs/inveterate gamblers with other people's money.

...As for the rest of the AZ delegation in addition to Harry Mitchell, Democrats Gabrielle Giffords and Ed Pastor, and Republican John Shadegg voted in favor; Democrat Raul Grijalva and Republicans Jeff Flake and Trent Franks voted against.


1 comment:

Duke said...

No matter how much pork they crammed into the flawed bail out bill it should never have been approved. It was theft on a grand scale.

I am certain that every politician, from both parties sent out a similar letter, "I didn't like a lot about the bill but it was just too important." That's a bunch of crap. The Congress ignored the will of the people to pass a bill that enriches wall street and the big banks while doing nothing to stop the financial carnage.

Vote them all out.