Scott Garrett

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. I appreciate that. Can you just tell me one question: Whose name appears on the current budget that we're operating under right now? Who submitted that to this Congress?

Mr. GARRETT of New Jersey. Not the budget that's right before us, that we are operating under right now. Whose budget, for the last 2 years, has come before this House to be voted upon?

Mr. GARRETT of New Jersey. And we are in such difficult times, now is not the time to be putting further burdens on the American family. I appreciate that. I believe you yielded, or the chairman then responded by saying, we're in this situation because the budget that we had previously was a budget that spent too much and had problems with that budget. Wasn't that the response that we heard?

Mr. GARRETT of New Jersey. So the problem was, the reason we're here today, according to the other side of the aisle, was that the previous budget, the budget we're operating under right now, was spending too much. Is that what we heard from the other side of the aisle?

Mr. GARRETT of New Jersey. I would ask then--I would yield some time to the chairman of the Budget Committee, if the chairman of the Budget Committee would yield to a question, if the chairman of the Budget Committee would yield to a question.

Mr. GARRETT of New Jersey. And I would like to respond in kind just as you responded in kind to me. So when you're on your time we would like to have that documentation. We'd very much like to see it. I also appreciate the fact that the gentleman from New Jersey, that he says that the Democrats are presenting to us a different form of budget. Absolutely. The American public, I think, is outraged with the type of budget that they are presenting. It's a budget that spends too much, borrows too much and taxes too much. It spends more than any other government or any other budget that we've ever seen in the history of this country. So much of the time they lament the fact that we are brought to this table today because of the budgets of the previous administration. Yet, what do they do? On the one hand they're saying that those previous administrations failed to spend enough, and that's why they have to spend more; but on the other hand, they lament the fact that over and over again the previous administrations spent too much. So which is it? Was the previous administration spending too much or too little? They speak out of both sides of their mouth. And as far as borrowing, that poor child that is born today, that poor child that is born today, he will realize that he will be burdened with upwards of over $30,000 in debt just because of the extra spending in this legislation. That's on top of the $57 trillion of indebtedness that's already incurred by that child being born. So the child born today, before he can even think about putting a few pennies away, or his parents or his grandparents can put a few pennies away in his piggy bank, if you will, to start saving up for his college education or his marriage or a new car, first of all, they have to start putting away pennies to start paying for this indebtedness that the other side of the aisle is creating. You know, I came down to this floor because I heard the chairman of the Budget Committee responding to the ranking member of the Budget Committee, and I appreciate the work of the ranking member and the points that you were making as to when you were saying that now is not the time when we are in such difficult equations.

Mr. GARRETT of New Jersey. I certainly appreciate that. We were just discussing the reason that I was on the floor was, in part, response to your colloquy with the ranking member before, and you were saying that part of the reason we're here today is because of the budget problems that you experienced coming into this administration, the Obama administration.

Mr. GARRETT of New Jersey. I thank the gentleman from Wisconsin. And I would have liked to thank the gentleman from New Jersey if he had yielded because he has made that same statement over and over and over again on the floor with regard to how many more jobs would be produced under their budget and under the proposals by the Republicans. And each time when we try to ask him where his documentation for that or where the proof is so that he can prove it to the American public, as just happened right now, he has refused to do so.

Mr. GARRETT of New Jersey. And your comment was, it's a problem with the previous budgets. That was your comment on the floor.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. To the gentleman from Iowa, I appreciate your organizing this hour on the floor. And I came here ostensibly to talk about the issue affecting the American public today, and that you touch on it at the end there as far as the regulation of our financial system. But inasmuch as the chairman of the Financial Services just did spend the last hour addressing the sub issue of that is whether the charges against him, whether they were legitimate, was the basis of his discussion for the last 55 minutes whether it is legitimate as some on this floor and outside in the media as well and other groups and what have you and have accused him of being primarily or ostensibly responsible for some of the problems that we now find ourselves in. I will just spend a minute, even though he spent 55 minutes, on that. As I said before, in Congress there have been various champions on either side of this issue. Richard Baker, when I came to Congress and you came at the same time, was a champion of trying to rein in the excesses that were in the GSEs, Fannie Mae and Freddie Mac. There were other people on the outside, as well, actually in the Bush administration. He chastised the Bush administration for not pushing this legislation and putting other impediments of going forward with it. The truth of the matter is that the Bush administration in the form of the Secretary of the Treasury, I believe it was both Snow and Paulson, who came to the Financial Services committee while I was there, and said, there are problems in the GSEs. There are problems in the Fannie Mae. There are problems in Freddie Mac. And they were ones that the Bush administration was, in fact, pushing for some sort of control, some sort of limitation, some sort of reining in of the GSE. So the Bush administration was doing that. Richard Baker, who was always sitting up in the top row way above me since I was a freshman and a sophomore at the time, was championing that cause as well to say how do we rein them in? And I became involved with it, and I put in some amendments myself, and one was to direct the new regulator to establish limits on the GSE's portfolios in case there were any issues of safety and soundness or possible systemic risk, a word that we discuss now. Representative Paul offered amendments to cut off Fannie and Freddie's $2 billion line of treasury which would have been one of the key aspects of sending a message to the private markets as to whether they can believe or not, whether the Federal Government were to stand behind them. I know the chairman just said, and he said repeatedly, ``to those investors who believe that when they are investing in the GSEs that the full faith and credit of the United States Government would stand behind them, I'm telling them right now it is not the case. Well, that, of course, was the case. It was an implicit guaranty. It became explicit, however, when things began to fall apart in the last year, and now you and I know what has been the cost to the American taxpayer, literally hundreds of billions of dollars. But the chairman did say, as far back I think it was, as in the year 2000 which before I was even there, when the Bush administration was pushing these issues saying there are some problems here, he said he did not see, the chairman said, actually he would have been the ranking member at that time, he did not see the need for the further regulations because he said ``there are no problems here.'' And he did it again I guess in 2003, saying, again, he did not see a problem with those, either one of those companies. I know later on he did say that, probably in 2003, any one of us would have said the same thing with regard to other banks, the Bank of Scotland or some other banks what have you, there wasn't any problems there, and now, of course, we know--I shouldn't have mentioned this particular bank that he had said--but other banks back in 2003, a lot of us would not have said there were problems in those banks. But we are talking about a different level of problems with that situation. Today we are having problems with those banks, with their investments. With the GSEs, the argument that a number of us on our side of the aisle was making, that President Bush's administration was making as well, was a systemic risk, that by allowing basically unfettered lending by these institutions and by the implicit guaranty that the Federal Government placed behind them by the $2 billion line of credit, you place a systemic risk. And by putting no limitations on either one of those organizations, you allow them to borrow and borrow and borrow with no limitations on their portfolio, which is something I and others were pushing strongly to try and rein them in, you create a systemic risk. So, yes, there was obviously a systemic risk both in 2003 and 2000 as well, until it finally exploded to what we have today. So I think that is where the outside groups, maybe some Members in this Congress, try to say, that some Members were pushing for tighter regulations, others were leading the fight saying there wasn't any problem, that you didn't need it, so that in 2005 the facts were some of us were actually going to committee, and I don't have them all here, but I was going to committee and saying, here are some other bills, yes, he is right, a lot of Republicans voted against those bills as well, but he was obviously the ranking member and saying that there was no need for those. And I will yield back.

Mr. GARRETT of New Jersey. Well, I'm certainly not going to question the statistics of the chairman because I believe he was holding a paper or had some other statistics before him. Since I don't have them, I'd certainly take the chairman at his word. I think though that you have to see the larger issues that came out of that. And the message that the government was sending, whether through that or through other mechanisms, did have a profound impact upon the rest of the marketplace, not only in the low-income area but otherwise, not only through that program, but through the Federal Reserve regulations, the Boston Fed issuing certain guidelines, if you will, as far as lending practices, and that had profound impact, not only on those institutions as the chairman made reference that may come under their auspices or their control or their authority, but through the rest of the marketplace as well. In other words, once you sort of get the ball rolling as far as what the new underwriting standards, and this is really what was being created during this time, in one segment of the market, that ball was just continued right across the rest of the marketplace as well. Some of us, as I said before, seeing that as just the beginning piecemeal of this was rolling out we said there may be a problem as that ball goes along and grows, gains weight and what have you and has impact elsewhere, and eventually we saw that it was picked up by the rest of Wall Street.

Mr. GARRETT of New Jersey. I guess it would be a fair generalization that from the other side of the aisle that the push was, the emphasis was for the GSEs to focus on their public housing program, in other words, that they should be created, although that was actually a change in their original mission, as you know, but that new changed mission was to say, how can they be used to advance the cause of affordable housing? And so that was always the posture from the other side of the aisle. And that is why there was constant pushback when Ed Royce or other Members on our side said, well, maybe we should put some limitations on one of my amendments, on the portfolio, rather the conforming loan limits, to say that it shouldn't be too high. Well, no, they want to have no limitations, or the portfolio limits, no, there should be no limitation. So it is always clear they were in one direction and we were slightly in a different. I yield.

Mr. GARRETT of New Jersey. Well, my dad always said give credit where credit is due. And the chairman was correct to say that those of us who were really strongly pushing these issues didn't get as much support as we would have liked to from our colleagues on this side of the aisle. But as I look at some of the other amendments I put in, I got almost virtually no support from the other side of the aisle for some of our amendments which would have put in limitations. For example, I put in an amendment that would require the GSEs to hold only mortgages and mortgage-backed securities that exclusively support affordable housing. Now there is an idea if you think about it, if the idea behind the GSEs, one of the functions is to support affordable housing, then if you put that amendment in, it should fall in line with what the other side of the aisle was advocating. And they should support it. But there is another side benefit to allowing them to expand and grow outside of the area of affordable housing and that basically helps their balance sheet and also helps the remuneration to the people at the top of the organizations, to their CEOs, because if their balance sheet is good and their profits are based just like AIG, these bonuses and what have you, it benefits them as well. But we got no votes, well, from the chairman, I'm certain of, but basically from everyone from the other side of the aisle. My good friend, I'll explain one other amendment. The portfolio limitation, Representative Price offered that amendment as well. Same thing, to reduce the amount of the GSEs portfolios again. I do recall that the chairman was opposed to that, and I believe that just generally speaking, no support from the other side of the aisle. So I think that's the underlying message that's probably out in the media and outside of this House as well, as to where the two parties stood on it. Maybe we didn't have as much support as you and I would have liked from our side, but clearly it was a one-sided push for a long time of seeing that there was a systemic problem and trying to do something about it.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. What I am saying is not how the votes were going. I was saying as to which Members actually stood up and were most vociferous on this issues. Not all the Republicans were vociferous on it; there were one or two or three that were vociferous, as Richard Baker was on this side. And on those other issues, maybe because you were ranking member in the minority years, but otherwise you were very vociferous on opposing those bills.

Mr. GARRETT of New Jersey. Right. And ``no'' in committee. Obviously, I saw some of the problems and had concerns early on. Secondly, I will make a suggestion to you as to why you get the accusations, if you will, or the statements about you, as you will. I didn't see the program. I heard you were on Lou Dobbs and other things like that the other night where those statements are often made. I will make the suggestion as to why that may be, if you will.

Mr. GARRETT of New Jersey. Just two quick points. And I appreciate the gentleman yielding. One, as an individual who was one of the few in those numbers who voted ``no'' on those amendments----

Mr. GARRETT of New Jersey. I'm thinking back. If you're referencing the time when--actually, I think I had one of those amendments, if I'm not mistaken. I know one of the amendments I made and I withdrew, and then I made some other amendments, and I think Ed Royce and I'm trying to think. There was a whole series of amendments.

Mr. GARRETT of New Jersey. When I came here in 2002, in that election and that year and joined the committee, I immediately became somewhat involved in this issue, although I had never been involved in it before. I saw in our committee, between both parties, that one person stood out, in my mind, and a lot of other people's mind, as the person who was always trying to fight to rein in the GSEs. And that person, who is no longer with us, is Richard Baker. He was articulate, he was eloquent. He was always on the facts and what have you. He was always pounding, pounding, pounding at every opportunity. So I and other people saw him as being on that side. And, quite candidly, when we had those debates, when some of those amendments as you referred to before--and I think there were other ones in the later months that I and others made from the conservative point of view; a number of us saw the champion on the other side of that issue out of both parties, out of both Republicans and Democrats; and I agree that there were some Republicans who were vociferous as far as letting Fannie and Freddie do----

Mr. GARRETT of New Jersey. I would like to ask you about that. I'm listening to what you are saying, if I could.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. If the gentleman would yield.

Mr. GARRETT of New Jersey. Just a point on this: For those who were watching the debate--and it went on all day yesterday on this issue and for hours long during today as well--there were assertions on the other side completely made over and over again. Any time we raised this issue as far as the tax on the American family and individuals as well and as to whether it's going to be $1,600 or $1,700--you said it's under $2,000--there was an assertion on the other side of the aisle that's it's not in there. That's not true. Ranking Member Ryan, I think, had the definitive statement on it. It's not us making those statements. It's not even outside organizations making those statements. Although, outside organizations have, in fact, confirmed that that would be in place. In fact, it was our very own, nonpartisan CBO, Congressional Budget Office, that came up with that figure. So it is in there. It is relevant, and it has been documented. I just wanted to reinforce that point.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Madam Speaker, I rise today to draw attention to Iran's mission for nuclear proliferation. If Iran were to acquire nuclear weapons, the repercussions would be detrimental to our global security. A nuclear Iran would not only pose a threat to the United States and our allies, but would also destabilize an already volatile Middle East region. Under the guise of energy production, Iran is today actively seeking to acquire nuclear weapon technology. This fact is supported by United Nations inspectors who have found that certain aspects of the Iranian nuclear program are useful only for developing nuclear weapons. Recently, Iran has further developed its nuclear weapons production capability. In December, Iran constructed a domed containment center adjacent to a heavy water reactor in Arak. This structure makes it impossible to monitor the reactor by satellite. In the past three months, Iran has installed nearly 1,500 centrifuges. As a result, it could take only 2 to 3 months for Iran to enrich uranium to weapons grade. Furthermore, Iran has recently acquired 2,200 pounds of low enriched uranium--enough for one first-generation nuclear bomb. A nuclear Iran would significantly impact the surrounding region. The repercussions would be felt not only by Middle Eastern countries, but also by countries around the world. The possible outcomes could range from a Middle Eastern nuclear arms race to the sale of nuclear technology to terrorist organizations such as Hezbollah and Hamas. It is widely accepted that Iran is one of the largest sponsors of terrorism; this reality has been published in the Central Intelligence Agency's World Factbook analysis of Iran. The United States, the United Nations, and the European Union have all placed economic sanctions on Iran due to Iran's sponsorship of terrorism. Hezbollah, a terrorist organization formulated and supported by Iran, is responsible for numerous terrorist attacks; the most infamous of these attacks occurred in Beirut on October 23, 1983 when Hezbollah detonated a bomb inside a U.S. Marine Barracks and killed nearly 300 servicemen. It is imperative that we in Congress do everything we can to prevent Iran from obtaining nuclear weapons. I am pleased by the recent steps taken by my Congressional colleagues to ensure that this event never takes place. Specifically, I was encouraged that the Financial Services Subcommittee on International Monetary Policy and Trade held a hearing about H.R. 1327, the Iran Sanctions Enabling Act, on March 12. Afterward, I urged Chairman Barney Frank to schedule a markup of H.R. 1327 sometime before the April recess. In closing, I urge my fellow Members to support taking the necessary steps to limit Iran's access to nuclear weapons. We must convince Iran to turn away from its current, dangerous course of action.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Just to the gentlelady. I appreciate that. To the gentlelady--I just ran through the history of saying that it initially began as a Fed program and then became a TARP program, without any restrictions on it.

Mr. GARRETT of New Jersey. I'm reminded of the statement that the nearest thing to immortality on this Earth is a Federal agency or Federal program. So some things do apparently live forever--and that's Federal Government programs. And on to this point, if the gentlelady is still on the floor, the history of the underlying problem here is AIG. And it did in fact start not as a TARP program, but as the Fed Reserve, and that was 9/16, when the Fed gave an $85 billion loan to AIG. That did change, as the gentlelady knows, on November 10, and it basically became a Federal TARP program when the loan was restructured and reduced. And it eventually changed again on March 2. I assume the gentlelady who's the sponsor of the bill is familiar with that history. I will yield to the gentlelady to make sure that she is understanding of the history of how we got here.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Madam Chairman, tonight the Democrats are continuing their lengthy rhetorical tradition of saying one thing on the floor of the House but saying a far different thing in their budget. We know the greatest long-term threat to our Nation's economic security is the looming explosion of spending in our Nation's largest entitlements. We know this. Everyone in this House knows this. But in case anyone has forgotten, let me just share some facts that I did with the committee. You know, back in 1959 when I was born, at that time the employer- employee share of the payroll tax used to support Social Security was 4.5 percent. When I was about ready to go to school in 1965 and Lyndon Johnson was the President, they added Medicare as an entitlement, and the taxes went up to 8.8 percent. Today, the combined payroll tax for these programs is 15.3 percent, far higher than the programs' creators ever imagined. But what is worse is that, despite the fact that 15.3 percent of every dollar earned in America is used to fund these programs, that alone is not nearly enough money to keep them afloat. When a child is born in this country, in the United States, as soon as that child takes its first breath, they owe for all those type programs $184,000 the day they're born. For those keeping track, this is more than three-and-a-half times the median household income. Just to preserve current benefits that these programs provide, this generation would have to pay twice the rate of taxes--that's more than 30 cents out of every dollar earned in America--to maintain the status quo. So, in short, even as my friends on the other side of the aisle repeat their claims to be protectors of those most in need, and those most likely to need the assistance that our largest safety net programs provide, their choices in this budget, as in their past two budgets, do absolutely nothing but to hit the gas on the demise of our Nation's most critical safety net, while at the same time consigning the next generation of Americans to a likely insurmountable burden of debt. Every year that we don't fix this problem we add an additional $2 to $3 trillion in unfunded obligations to our children. And yet the Democratic majority often claims that their judgments are a moral document. I ask you, what kind of morals do we subscribe to if we prescribe our children to a life of indentured servitude in service of government largesse? We know that there is a better way. We can reform these programs to ensure that they can do so, and we can start by amending this ill- conceived budget.