W. Akin

Mr. AKIN

Mr. AKIN. Reclaiming my time for just a minute, what you were just saying is today--it wasn't quite the snap of a finger. It was 15 minutes. It was a 15-minute vote. We spent the entire money that's going to be collected in tax revenue from America for the year 2008. I yield to the gentleman.

Mr. AKIN. Reclaiming my time, that's a good question. We received hundreds of calls. Almost all of them were completely against this massive, massive spending. I note, though, that we've also been joined by the very distinguished judge from Texas noted for his wit and his good common sense. Congressman Gohmert, I would yield to you if you have a comment that you would like to make.

Mr. AKIN. If the gentleman would yield, are you saying that originally Ireland was going to get rid of all income taxes on corporations to encourage them to locate there and to work their free enterprise magic there, if you would; is that what you're saying?

Mr. AKIN. Yes, I do yield.

Mr. AKIN. Mr. Speaker, I appreciate your patience in working with us here and allowing us to have this time to talk about something which is a very important and serious topic which has captured the attention, I believe, of most Americans: the work of the House of Representatives in Washington, D.C., today on the floor of the House. We have in a way created history here in a unique way. We have heard for the last 6 or 7 years, depending if you are talking about the war in Afghanistan or the war in Iraq, about the tremendous costs of these two wars, particularly the war in Iraq. Year after year we hear from all different sources, all different political stripes, that these were very, very expensive wars. And yet, if you were to add up the total cost of the war in Iraq over the past 6 years and add that to the cost of the war in Afghanistan for the last 7 years, adding those two numbers together, in one fell swoop this afternoon we spent more money than that, in excess of $800 billion. I want to repeat that, because this is a fact that I think people are starting to add it up and say this is what is going on, but I don't know if that has sunk into people's minds: Today, on this floor, we voted on a bill which will spend more money than the war in Afghanistan and the war in Iraq added up. Now, how did we get to this strange position where we are so concerned about our economy, so concerned about deficits, so concerned about the government overspending? We have heard that from both political parties for some period of time. How do we get to the point where, in one fell swoop, we just passed $800-plus billion? Well, in order to try to put that in perspective, what I am planning to do tonight, and I am going to be joined with a number of my colleagues of very great reputation from all over the country; what I am going to be doing tonight is talking about how this developed, what is the nature of the problem, how did it occur; and then, how do we scope how big the problem really is, and what are the natures of the different ways that people might want to solve the problem? The bill that we passed today was theoretically to solve a problem, and so let's go back just a little bit and say, how did we get into this particular mess that we are in? Well, it goes back quite a ways to the Jimmy Carter years when we created various programs to try to help people to be able to get loans on houses, people that lived in areas where certain particular geographic areas were hard to get loans. And so the Carter administration put together the Community Reinvestment Act, and it was originally saying that when we are doing these different home loans, that we need to have some mechanism so that we can create some way for people that live in some more difficult areas to get loans in, for them to try to be able to get loans. I would suppose you would call it the economically disadvantaged areas. Well, that was under the Carter years. Now, when we move forward in time, under President Clinton what was done was it changed this Community Reinvestment Act and it said that and it increased the percentages of the loans that had to be made from a banker's point of view to people who were not as good risks. In fact, it demanded that there were loans made to people who were just flat a bad risk and very likely would not be able to pay the loan. At the same time in the 1970s, we created Fannie Mae and Freddie Mac, and these were two quasi-governmental agencies, and the purpose of them was also to provide loans for people in the sort of middle-income type bracket of housing so they could get loans at a reasonable rate. So Freddie and Fannie were born. They were really not quite government and they were not quite private. They were in the in-between zone, and they started more and more to make real estate loans, to the point that a few years ago when Freddie and Fannie got into trouble, more than half of the home loans in America had been made through Freddie and Fannie. So they had grown over the years to tremendously large quasi- governmental organizations. What happened under the Clinton administration was Clinton forced Freddie and Fannie to take a whole lot of loans, loans that were not going to be very good loans, and he said you have to take them along with the other loans that you are taking. So the government, as a matter of policy, forced Fannie and Freddie to make loans to people who were going to have a hard time for some of them to pay back. This starts to go along at the same time with Greenspan reducing the interest rates, so there was a whole lot of money available for people to put into houses. And probably many realize now when we talk about 2001, 2002, everybody's home values were going up like a skyrocket. Everybody was happy as their house was getting more and more valuable. Just in the 2000s alone, they doubled. And many people took secondary loans on their homes. So this easy money in combination with the fact that you have now got all of these different speculators jumping into this housing market, and what happened was because of the fact that Freddie and Fannie were playing very, very loose with their rules and regulations, were taking loans. And they wouldn't ask anybody how much money they made. And they wouldn't ask whether they were able to pay or whether they were going to make a downpayment. They said, you want a loan, fine, we will give it to you, because the assumption was that you and I and the American taxpayer would back these Freddie and Fannie loans. But more and more loans were being made to all kinds of people, including speculators, where there was no way they would be able to pay those loans back. So as the housing bubble burst. All of a sudden these loans started coming due and people were defaulting on their loans, and there were cries of crisis on Wall Street. An additional fact that was going on here, you have the rating agencies, one of them is known as Standard & Poor's and the other was Moody's, and I believe there was another major rating agency, what they would do, they would look at all of these loans that came to them, and they would rate them as to how good the loans were. Well, they wouldn't be asked to do any rating if they rated the loans not very good, so these loans were all rated AAA. That means this is good stuff, you can afford to invest in it. So these loans were sliced and diced. They were sold all over the world, and many different banks and institutions held these loans on their books as an investment. Well, what started to happen, these investments became of no value. People couldn't pay the loans. They started to realize what had happened was there was an absolute runaway on the loan process and the people that had gotten the loans didn't really have jobs and couldn't really pay off the loans. And so you started to have all of these mortgage-backed securities started to seize up, and the entire credit market started to seize up. That was last fall, and it was that time when Secretary Paulson approached Members of Congress and said we have a huge crisis on our hands. It is a disaster, and what you all have to do is you have to give me $700 billion. And I would like it in a brown paper bag in unmarked currency, and I would like it in a hurry, too, please. A lot of congressmen were going: $700 billion? So you have the cycle of the first bailout. Today we come to the second. We have already spent $350-plus billion of that $700 billion, and people could argue whether it has had any significant effect. Certainly it was not spent in a transparent way. Most people don't know if we got anything for our money, but it was a tremendous amount of money that was spent. So today we come to the floor with the economy still in bad shape. Why is it in bad shape? Well, it is in bad shape for a couple of reasons. First, of these bad loans, only about half of them have come down and different institutions have had to write them off. There is still another half of what are called Alt-As or ARMs, there are two different kinds, that will probably also in the next 2 years be defaulting as well. So we have only drunk about half of the cup of poison of bad loans that were created by liberal policies and an unwillingness to regulate these quasi-governmental agencies. I would like to call to your attention a New York Times article, not exactly a right-wing oracle, and this article is dated September 11, 2003. It says, ``New agency proposed to oversee Freddie Mac and Fannie Mae.'' So it wasn't like everybody was asleep at the switch. People were starting to wake up in 2003 that Freddie and Fannie were out of control. The beginning of this article, ``The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.'' The Bush administration called on Congress to get these wild and woolly loans under control. And so what happened? Well, the Republican Congress passed a bill to do what the President was asking for, to put much tighter regulations on these loans so we are not making a whole lot of loans that are not going to be paid and create a huge crisis as the savings and loan crisis of a decade ago. Here is an interesting quote in the same article, September 11, 2003. ``These two entities, Fannie Mae and Freddie Mac, are not facing any kind of financial crisis.'' Who said that? Well, ``said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee.'' Who is it that is overseeing this bill that we passed today? It is one and the same. So in 2003, the Democrat Party, the Democrat ranking Financial Services Committee chairman, he is saying that Freddie and Fannie are not facing any kind of financial crisis. Now there are people who want to say that the economic problems that we are facing show that capitalism isn't any good. This has nothing to do with capitalism. This has everything to do with the practice of telling financial organizations that you must make loans that we know are going to fail. That is not a very smart thing and is not looking very smart now, but this is where we were in 2003. And the article goes on to say that the opposition to the bill that we passed in the House and Senate was the Democrat Party, and the bill was not passed because we didn't have 60 votes, and so we didn't oversee Freddie and Fannie until the train wreck actually occurred. So how did we get into the crisis? Well, the simple answer is we got into the crisis because we started to demand that financial institutions accept and make loans to people that really couldn't afford to pay for them. Now that raises an interesting question. How compassionate is it, how compassionate is it really to be making loans to some family that can't afford their mortgage payments? You have a mom and dad and some kids in some house, and they start arguing and fighting because the mortgage payment is too much for them. And so they get the credit card and the credit card has a high debt level. And so they start to say you shouldn't have spent money because we have this big loan. So how is it compassionate to put someone in a house they can't afford? Yet that is what we were defending and doing, and that is what caused this financial problem. Now the interesting thing is that people say when America catches cold, the world catches pneumonia. And so this little oversight in assuming that the American taxpayer was going to bail out loans that were made irresponsibly has had worldwide implications and has caused all kinds of trouble in major Wall Street corporations closing up, and banks hunkered down worried about more of these loans that are going to be coming due in the next 2 years. People are very mad at the banks. They say we gave you all of this bailout money. Why aren't you using it to get the financial service markets up and going? The answer is because we are afraid that when the rest of these things come down, we are going to need this money to cover all of the bad debts that are made. So that is really the nature of where we are. This is something that is a result of active decisions on the part of people in Congress who are supposed to be, among other things, responsible for keeping an eye on our currency and the solvency of our economy, and we just basically have ignored what was our responsibility. Now this is not something that you can dump at the feet of Republicans. The President, and once again I want to read this, this was 2003, the article says, ``The Bush administration today recommended the most significant regulatory overhaul in the housing and finance industry since the savings and loan crisis a decade ago.'' This was something that we saw coming and it was something that the other party was unwilling to deal with. So that is how we got to where we are. Now today, today we adopted spending over $800 billion. Now as I said before, $800 billion, it is hard for many of us to think about how much that is. But we have heard how expensive the Iraq war was, all these past 6 years: ``We can't afford this war in Iraq. We can't afford Afghanistan. That is bleeding us dry.'' So now facing this crisis, what are the solutions we have because it seems like a very dire thing and it certainly is very serious, something that deserves our full attention. What are the different tools that we have to deal with this big mistake that we have been dealt? Well, there are basically two theories of economics, and one of them is called the Keynesian approach. It is older and has been around since the Great Depression. And the Keynesian approach says that the Federal Government needs to spend some money. If the Federal Government spends a whole lot of money, that will stimulate demand and people will want things and therefore somehow or other we are going to get out of this recession or depression if we just spend enough money with the Federal Government. Well, I guess that was an interesting thought when the budgets were closer to balanced. But if that were true, we have already spent way more money than we have as a country. We are already in debt. We should have a great economy if that theory were true because we have already been spending a whole lot of money. But that is the Keynesian approach. It seems by some degrees like the idea of grabbing your shoelaces and lifting up and flying around the room. If we just spend enough, everything will go okay. Can you imagine any American family that would dare to try such a strategy if they were in financial trouble with their family budget? Are they going to spend a whole lot of money and hope that it will make everything okay? I don't think so. History seems to indicate the same result. When FDR used that approach with the first big recession that came along, he turned it into the Great Depression. He spent a tremendous amount of money on public works projects, and some of them might have been useful, but the net result in the economy was that the recession just kept going year after year after year, and we called it the Great Depression. Now, he wasn't the only one who tried this. The Japanese tried this in the 1990s, and they basically had an entire decade of lack of productivity and complete stagnant economy in Japan because they did one massive spending bill after another thinking it was going to work to pull them out of a recession, and it just made matters worse and worse and worse. In contrast to that economic approach is another thing that is typically called supply-side economics, and that is the theory that government really cannot stimulate the economy at all. The only thing the government can do is tax or not tax. And when it does tax, it can slop money around. But the government cannot actually create wealth whatsoever. It merely can take wealth away from citizens and redistribute it or refuse to take the wealth. Instead, the supply-side model suggests that the best way to deal with a recession is to try to allow the people who are the inventors, the investors and the various risk-takers and entrepreneurs, allow them to have money to spend on new ways of doing things to build productivity in America. Particularly targeted with this approach would be the small business people, because small business people provide about 80 percent of the jobs in America. So if you have small businesses going strong, people investing in new ways and better ways to do things in small businesses, obviously some of those ideas will succeed or fail. But the result is you drive numbers such as unemployment and the overall productivity of the economy. And this is called a supply-side model. We have had several examples of the supply-side approach. One of the earlier ones was done by JFK, who was a Democrat, of course. He did a major tax cut. And he did the tax cut in the right areas, and the economy snapped back and responded very favorably. He was followed another number of years later by Ronald Reagan, who did the same thing. He did a very large tax cut. But he made sure that the money got into the hands of the people that are going to be able to create the productivity. And we had a decade of fantastic financial success and productivity in America as a result of Ronald Reagan's tax policies. People made fun of it at the time. They scoffed at him. But the reality was that the economy was very strong. It was tried again just a few years ago when I was fairly new here in Congress, and that was in the second quarter of 2003. I have some charts here which show what happened. What we did in the second quarter of 2003, which is the vertical black line on a couple of these charts, what we did was, we reduced the taxes of capital gains and dividends. Now what that was calculated to do was to allow the people who were the small business investors, the small business owners and the entrepreneurs, it allowed them to keep more of their money that they earned and plow it back into the small businesses. And so what was the result of this particular tax cut in the second quarter of 2003? Well, as you can see, this is a picture of gross domestic product. Now we had done some tax cuts in the first couple of years of the Bush administration. But you can see that the gross domestic product averaged about 1.1 percent, but was also up and down. It was pretty spotty. What you see happening here then, as a result of dividends and capital gains where we are pumping money into the small business, into the investors, you see this tremendous increase in gross domestic product running out to 2007 of 3.06 as opposed to 1.1. Now this tax cut is set to expire before long. But you can see the impact of the supply-side model. We're not the only people who have tried this. The Irish did this. They dropped their taxes on businesses and small businesses, and Ireland has just been booming and is almost an exact opposite model of what happened in Japan. You might ask, well, what happened with this gross domestic product? That sounds like some sort of a boring government number. How about telling me something about jobs? This is the same time period. You have got May of 2003. These lines going down are job losses. The average loss of jobs per month was 99,000 jobs a month during these earlier years of 2001 and 2002. Now you take a look at when we do the dividends and capital gains and take a look at the jobs gained. We went from a loss of 99,000-plus jobs lost per month to a gain of 147,000 jobs gained per month. This is an example of the supply-side kind of model. What it is saying is that government should not be spending tons of money. Government should be cutting back what it's doing. And, in fact, what government should be doing is allowing productivity to take place in the marketplace and allowing the people that own small businesses to make those investments which result then in employment, and it results in better gross domestic product. But last of all, and this is kind of an interesting idea, take a look at the effect of Federal revenues. Now, it seems to almost make water run uphill when you say, hey, we're going to cut taxes. What would you expect would happen to Federal revenues? Well, you would expect the revenues to go down. If you lower the taxes, you're not going to collect as much money. But that is not what happens. Why is that not what happens? Well, this is actually the result of Federal revenues. Take a look at where they turned around. Again, the beginning of 2003 and after 2003, after these tax cuts went into place, Federal revenues are going up even though we cut taxes. Now how could that be? How could that happen? How could that be true? Well, think about it for a minute. Let's just say you are king for the day. And your job is to try and raise as much government revenue as you can to pay for the cost of government. And you're allowed to tax loaves of bread. Now you start to think in your mind, let's see, I could tax 1 penny per loaf and it would hardly be noticed. But then you start adding it up. And you say, I wouldn't get very much money that way. Then you think, a-ha, I will charge them $100 a loaf. By golly, that will get a lot. But if you tried it, you would say, no, what is going to happen is nobody is going to buy a loaf of bread if you have a $100 tax on it. I will get something else instead. So common sense would say to tax somewhere between $100 a loaf and a penny a loaf. There is some optimum point where you adjust the tax and you are going to get the maximum amount of revenue. So what has happened here is that we have taxed our citizens so much money that when we reduce taxes, the result is the economy surges and we end up with actually more tax revenue, which is what actually happened here following 2003. So this is the other approach. There are two approaches. One is the Keynesian approach, spend tons and tons of money and somehow it is going to make everything better. Or the other one is, no, don't spend a lot of money. Let the money work in the hands of people that can be productive to build productivity, to build jobs, to build GDP and to allow the Federal revenues to increase. And so we have these two approaches. Now, today, we had to take a choice, which approach are we going to use? And it was a straight party line vote, at least from the Republican side. Not one Republican supported this Keynesian idea of just slopping a tremendous amount of Federal spending--the money that we don't have, by the way--as if that is going to fix this problem. So our problem with it is, it was very courteous of the President to stop and pay us a visit yesterday, talk to us about what he wants to do with the economy and plead with us not to make it political. And it is not our objective to make it political. But the President said, but if you think it's not going to work, that is a different matter. And so I stood up and talked to him. And I said, Mr. President, you have been very courteous talking with us today, but I think you made a couple of bad assumptions; and so my belief is that the package that you are proposing will not work. It is not only not going to work. We can't afford it, and not only can we not afford it, it's going to make matters worse; and here is why. And so today we had a choice. We had a choice between the Keynesian model of spending a ton of money or the other model, which we proposed, which was not to spend a whole lot of money, but make sure that the money gets back in the hands of the small businessman and to allow American productivity to take place. Well, as I said in my introduction at the beginning of my comments here tonight, what happened was we just passed an $800-plus billion. That is, once again, take all of the money for the cost of the war in Iraq, take all of the money for the cost of the war in Afghanistan over the past 6 and 7 years, and you put that together, and what do you end up with? You end up with the fact that this bill costs us more than all those wars. And that is on top of this big bailout from just a couple of months ago. Can our economy handle that? What that does is it puts us more into debt than we were during World War II. As a percentage of our overall budget, we're getting close to 10 percent debt, whereas in World War II, we were looking at 6 percent. I'm joined here by a good friend of mine, my colleague from just over in Iowa, just a State or so away from the great State of Missouri, and he is going to be joining us in just a minute to talk a little bit about his perspective on this absolutely incredible bill that we have just passed today. So I would yield to the gentleman from Iowa. If you would like to jump in here and tell me, what do you think about the fact that we just--I mean, I almost have to pinch myself, gentlemen, to think that just standing here a couple of hours ago, we just voted to spend $800 billion more than the cost of the war in Iraq and Afghanistan. There are other ways to look at that number. Would you like to jump in?

Mr. AKIN. Excuse me to the gentleman. The parallel then would be, what we should be coming home with is not bread and milk, but jobs for the economy; is that right?

Mr. AKIN. Congressman Cassidy, I think you're going pretty quickly here, and I think there may be some that aren't catching the implications of what you're saying. What you're saying is, this bill is not really stimulus at all, it's simply putting more money into things that we normally budget anyway. Is that what you're saying?

Mr. AKIN. Of course, in the Great Depression, you took a recession and turned it into a Great Depression and it just kept going and going and going. Because what they are doing is they are vacuum cleaning all of the money out of the economy for Federal jobs programs, supposedly creating jobs and starving the very productive sector of the economy that could be solving the problem.

Mr. AKIN. I yield to the gentleman from Texas.

Mr. AKIN

Mr. AKIN. Madam Speaker, I rise today in recognition of Catholic Schools Week. Next week, the Nation's nearly 8,000 Catholic schools will celebrate Catholic Schools Week. Catholic schools have made many significant contributions to the education of our Nation's children. In the Greater St. Louis region, Catholic schools have had a longstanding and proud tradition in the Archdiocese of St. Louis. The percentage of Catholic families who choose Catholic schools for their children is among the highest in the country. Currently, there are about 51,000 students enrolled in our Catholic elementary and high schools. Catholic schools foster an atmosphere of mutual respect. Students learn to value God, themselves, and others. As Pope Benedict XVI noted in his remarks at Catholic University during his Apostolic Visit to the U.S. last spring, ``Education is integral to the mission of the Church to proclaim the Good News. First and foremost every Catholic educational institution is a place to encounter the living God who in Jesus Christ reveals his transforming love and truth. This relationship elicits a desire to grow in the knowledge and understanding of Christ and his teaching. In this way those who meet him are drawn by the very power of the Gospel to lead a new life characterized by all that is beautiful, good, and true; a life of Christian witness nurtured and strengthened within the community of our Lord's disciples, the Church.'' Today I would like to recognize and commend our Catholic educators who are committed to a living and vibrant faith community founded on the Catholic tradition of academic excellence and thank them for enriching the lives of the children they teach spiritually, academically and socially. I strongly support the goals of Catholic Schools Week 2009 and laud their efforts to educate students dedicated to their faith, families, and values.

Mr. AKIN

Mr. AKIN. What you have just said seems to make a whole lot of common sense. Just repeating what you said, the thing that's going to get us out of the recession is going to be the economy. It's going to be the small business people, the entrepreneurs, the hard working Americans. They are the ones who are productive, they create wealth, and they pull us up. You are saying that should be the direction of our solution.

Mr. AKIN. Congressman Scalise, did you say that basically we have already gone from 700,000 now to a trillion? Is that already that high?

Mr. AKIN. So it's our grandchildren's money we're starting to spend.

Mr. AKIN. Mr. Speaker, we have an interesting topic that we're going to be talking about and developing over the next hour. I'm here representing the Republican Study Committee, and we would like to talk about the subject of our economy and the nature of the problems that we are facing but also what kinds of solutions are possible. I'm going to be joined by a number of other congressmen this evening, and I'm going to invite them to jump into our discussion. And, Mr. Speaker, I hope that you find the hour interesting and enjoyable. Now, one of the problems with having Congressman Akin here is I'm a former engineer and I get a little pedantic sometimes and I think it's important to exercise some discipline. And the discipline in this case is to define the nature of the problem in the economy in America. So before you go offering legislation or try to fix something, it's good to know what it is you are trying to fix, and that will allow you to answer the important question whether or not it's going to work, which is not exactly a small question. Unfortunately, we have spent an awful lot of money without really defining the problem on solutions which have not worked. And so that's why we need to take a little bit of time to talk about what's going on. As perhaps many people are aware, there are two quasi-governmental organizations called Freddie and Fannie, Freddie Mac and Fannie Mae, and they, of course, have home mortgages which they take care of financially for more than half of the different people in America that have homes. So these are huge organizations, but they are not quite government, and they are not quite private. They are sort of in a gray zone, and they were created, ostensibly, to try to provide decent home loans for American citizens. The problem, though, with Freddie and Fannie, because they are not really government, they were also outside of the administration's authority to be able to deal with them. So Freddie and Fannie started to get more and more innovative over the past years, and they started to make all kinds of loans to all kinds of people. As those loans were made, what happened was there was not good control to make sure that the loans were being given to people that could actually afford to pay the loans. In fact, we had, intentionally, Congress started to pass laws and put pressure on these organizations, as well as banks, to encourage them to make loans to people who could not afford to pay. Now, how that would be called compassionate, I am not quite sure, but Congress did that. So what started to happen, in combination, as this was going on, you have the Federal Reserve lowers the interest rate, so money is easy to get, and all kinds of people jump on the housing bandwagon, and you create this real estate bubble, people taking out loans, which they don't have jobs or the finances to pay off these loans. And pretty soon, as we got toward the more recent years, this bubble explodes and all of these loans, people are starting to default on them. Now, those loans had been packaged up and cut in pieces by Wall Street, sold all over the world. And now you have got one whale of a mess on your hands. Now, the question should be asked, then, well, didn't somebody see this coming, didn't somebody know that Freddie and Fannie were doing things that they shouldn't have done? Well, in fact, in the New York Times, the President, President Bush, the headline on the article in the New York Times, in case anybody wants to look it up, it's on September 11, 2003, well before any of this came down. It says here the Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. So here you have the President saying Freddie and Fannie are out of control, we need to get regulations on them. Now what concerns me is people are saying, they are saying, well, this is a failure of free enterprise. There's no failure of free enterprise here, this is a failure that starts right here in Congress, a failure of Congress to regulate these institutions which we created, and which went haywire by making all kinds of loans to people who shouldn't have had those loans, and now we are starting to pay the piper on it. So this is the President, in 2003, The New York Times, not exactly a right-wing oracle, you follow the article through, and we come toward the end and it says these two entities, Freddie and Fannie Mae, are not facing any kind of financial crisis, said Representative Barney Frank of Massachusetts. Now this is interesting, because what this article is saying is that the Democrats were opposed to the further regulation of Freddie and Fannie. They were opposed to it, and the man from this Chamber, who was on the floor no more than an hour ago, is quoted as saying, now, catch this, these two entities, this is Barney Frank talking, Fannie Mae and Freddie Mac are not facing any kind of financial crisis, said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. So it wasn't that people didn't know, the President knew, but what it was, in the Senate, the legislation to try to regulate Freddie and Fannie was never passed. So we have, in a sense, a repeat of other financial crises because we in Congress did not do our homework, did not regulate and allowed these loans to be made. Now, I am joined by some of my colleagues here and I am looking forward to chatting with them here. Just one thing I think that would also be helpful to know, we have defined the problem, and that is all of these loans that have been made and people got loans. That wasn't responsible, they couldn't pay the loans off. And so now these loans are being defaulted on. That is happening enough. It is creating problems. The question is, how big a crisis is it? Well, just to give you some sense, about half of the loans that we expect are going to default have already happened. That says we have drunk about half the cup of poison and it has made the world's financial system sick, and we have got another half to go. Kind of an interesting thing. I am joined by Congressman Lamborn from Colorado, a very wise and helpful influence in Congress, and I yield to the gentleman.

Mr. AKIN. I'll yield to you, and then we'll go to the gentleman from Louisiana.

Mr. AKIN. That was a very important point that you raised. That is if we are going to propose solutions, the question is does the proposed solution actually solve the problem or does it just make people politically happy. Are we really trying to specifically tailor the solution to something that is going to work.

Mr. AKIN. Before we get into the specifics of various solutions, let's just talk for a minute. You know, the question is, a lot of times people think Congress has some sort of a magic lever here in the Chamber. And when we pull this lever, it just makes the economy accelerate or something. You know, they say we are going to stimulate the economy, whatever that is supposed to mean. Really what Congress can do is we can either tax people or not tax people. We can take the revenue and slop it around in different ways. That's about all we can do. We don't create any wealth at all. So when it comes to the economy, the tools we have are, to some degree, limited just because of the fact that Congress really doesn't create anything. What happens is it's the economy that either pulls itself forward or stagnates because we have created some set of laws that's messing it all up. So as we talk about solution, we have got to be careful, don't we.

Mr. AKIN. It seems like to me, gentlemen, what you are recognizing is an inherent problem with this whole bailout concept. The whole idea of the bailout seems to be reward the person who did the wrong thing economically at the expense of the person who did the right thing.

Mr. AKIN. With all due respect, gentlemen, I don't think you are being quite fair in that. What you are really saying is when you don't have a credit card you can pay off, you are saying I am going to use your credit card and take it. I mean, why should people from the State of Missouri or Colorado pay for California?

Mr. AKIN. I just noted that the gentleman, Congressman Jordan from Ohio, is here, and I yield to him.

Mr. AKIN. We have a fantastic doctor from Georgia, and I would yield to you if you had a thought on the subject here.

Mr. AKIN. So I think what I am hearing you say is we just can't spend our way out of this with a whole lot of government spending. That would be a little bit like grabbing your shoe laces and try to fly around the Chamber. I see my good friend from Georgia is joining us for the discussion as well, Congressman Gingrey.

Mr. AKIN. You are referring to the same guy that said there is no financial problem with Freddie and Fannie; is that correct?

Mr. AKIN. Is a tranche and a slurp sort of the same, $350 billion, you are just kind of trancheing?

Mr. AKIN. That does seem like something that's a little upside down, doesn't it.