Johnny Isakson's Position Statement on the Economy
As our nation continues to struggle through the current economic crisis it is important to stay focused on the recovery aspects. I believe the key to returning stability to the economy lies within the housing market. We must find a way to keep people in their homes, stabilize foreclosures and return consumer confidence to the marketplace. Once stability comes back to the housing market, you will see investors and small business begin to reinvest in job creating activities, which will put hard-working Americans back to work. I will leave no stone unturned in pushing to address the housing market as the catalyst for turning around our entire economy. Our nation has always demonstrated a strong resiliency and I am confident we will once again bounce back stronger than ever, where hard-working Americans are at the front lines of economic prosperity.
Tax Credits for Homebuyers
I believe our economic problems started with the housing market and that we must restore the housing market if we are going to restore our economy. As a result, I worked with Senate leadership to craft a compromise to extend and expand the current first-time home buyer tax credit, which was set to expire on November 30, 2009.
This legislation, which was signed into law on November 6, 2009, extended the current $8,000 first-time homebuyer tax credit, as well as established a new $6,500 tax credit for “move-up” buyers so long as the home they are leaving has been used as a principal residence for five years or more. Both the $8,000 first-time home buyer credit as well as the $6,500 credit for “move-up” buyers expired on April 30, 2010. However, individuals who have contracts to buy a home as of April 30, 2010, will still qualify for the credit so long as they complete the transaction within 60 days. Additionally, I realize cost is a great concern as our nation faces unprecedented debt levels. During negotiations on this tax credit, I insisted that this extension and expansion be paid for so that it will not add to our debt.
Tax credits such as this only work by creating the sense of urgency to take advantage of them, bringing people back to the marketplace. Congress will not continue this tax credit past April 30, 2010.
I believe home sales not only stabilize the housing market, they boost our overall economy. Research shows each home sale has a positive economic impact on our overall economy. By restoring Americans’ equity in their homes, we increase American consumer confidence and optimism. I believe this tax credit will swiftly help our economy get back on track.
Economic Stimulus
When President Obama took office in January 2009, he called on Congress to pass a second economic stimulus. The House of Representatives passed its version by a vote of 244-188, but it was a non-starter for me, as it did not address the core problems that created the current economic crisis.
During Senate debate numerous Republican alternatives were offered - alternatives that put money directly in the pockets of the American people. I supported these amendments as I feel the American people know how to spend their money more effectively than the government does and will provide the best stimulus to the economy.
This economic stimulus package devoted too much money to programs that will not provide the stimulus our economy so desperately needs, and too little money to infrastructure and incentives for investment. I voted no on the stimulus bill H.R.1, and despite my efforts to create a more bipartisan and effective piece of legislation, the stimulus passed the Senate by a vote of 60 to 38.
Ben Bernanke
On, January 28, 2010, I voted to confirm Ben Bernanke to a second term as chairman of the Federal Reserve. The full Senate approved Chairman Bernanke’s nomination by a vote of 70-30.
While I do have concerns regarding Chairman Bernanke, I have greater reservations about changing leadership at the Federal Reserve during the worst financial and economic crisis since the Great Depression. If Chairman Bernanke was not confirmed, Vice Chairman Donald Kohn would have assumed leadership of the Federal Reserve temporarily while President Obama started the confirmation process over with a new nominee. This would have brought more uncertainty at a time we can least afford it. While some may disagree with some of Chairman Bernanke’s decisions, the fact is that during the most difficult economic crisis our country has ever faced, his policies helped avert a collapse and set us on the road to recovery.
If Chairman Bernanke had not been confirmed, there was speculation that President Obama would have looked within his administration to fill the job. The two names mentioned most were Larry Summers, director of President Obama’s National Economic Council, and Christina Romer, chair of the Council of Economic Advisers. I believe Chairman Bernanke is a better choice than either of these individuals.
I believe there should be more transparency at the Federal Reserve, and that’s why I was the fourth senator to co-sponsor legislation to require the Government Accountability Office to conduct a comprehensive and independent audit of the Federal Reserve.
S.604, the Federal Reserve Sunshine Act, would mandate an audit of the Federal Reserve by the Comptroller General of the United States to be reported to the leadership of Congress, along with the leadership of committees of jurisdiction. The audit would be completed by the end of 2010. It was the intent of Congress in 1913 to create the Federal Reserve as an independent non-partisan organization, and the Federal Reserve has been exempt of audit ever since. However, the time has come where there is a need for more accountability across the board.
I’m pleased Chairman Bernanke also has heard the message that the American people want more transparency. On January 19, 2010, he asked federal auditors to review the Federal Reserve Bank of New York’s role in the much-criticized rescue of the American International Group in 2008. I believe this is a step in the right direction.
Troubled Asset Relief Program
On October 1, 2008, the House and Senate passed H.R.1424, the Emergency Economic Stabilization Act. This bipartisan financial package was designed to stabilize credit and restore confidence in U.S. financial markets. Given the information I received in October 2008, there is no doubt that this legislation was absolutely critical at the time to unclogging the financial markets, freeing up credit to the average American and over time restoring the American economy to what it has been and always will be – the best entrepreneurial capitalistic system in the world.
On January 12, 2009, at the request of then President-elect Obama, President Bush transmitted an official request to release the second tranche of funds from the Troubled Asset Relief Program. On January 15, 2009, I voted in favor of “resolution of disapproval” of the release of this second tranche of $350 billion to the Treasury Secretary. I supported the first round of the Troubled Asset Relief Program because at the time it was critical to unfreeze the global credit markets. The Administration, however, then used the money in several different ways than what was planned originally, and the credit markets have not yet responded as strongly we had hoped. As a result, I could not justify supporting the release of the remaining funds. The Senate rejected the “resolution of disapproval” by a vote of 42 to 52.
I also voted on January 21, 2010, for an amendment that would have prohibited the Treasury Department from making any further commitments to spend Troubled Asset Relief Program funds and would have mandated that all returned TARP funds be used to lower our national debt. The Treasury Department has more than $300 billion in unused TARP money, and the administration as well as House and Senate Democrats have begun eyeing the fund as a way to pay for their new spending initiatives. Unfortunately, this amendment to end TARP required 60 votes to pass and failed by a vote of 53-45.
Financial Crisis Commission Act
In response to the financial crisis that continues to plague our economy, I introduced legislation with U.S. Senator Kent Conrad, D-N.D., to create a Financial Crisis Inquiry Commission that will be charged with fully investigating the near collapse of the banking system and the loss of tens of trillions of dollars. It is imperative that we gather all the facts and not rush to legislate as we seek to recover from today’s financial crisis.
On April 22, 2009, the Senate overwhelmingly passed my amendment with Senator Conrad to the Senate’s version of the financial fraud bill that would create a Financial Crisis Inquiry Commission. The House passed the financial fraud bill, 367-59, on May 6, 2009, with amended language that included the Financial Crisis Inquiry Commission. On May 14, 2009, the Senate, on a unanimous consent motion, agreed to relatively small changes to the bill and sent it back to the House. On May 18, 2009, the House agreed to the Senate’s changes. On May 20, 2009, President Obama signed the legislation into law.
The 10-member, bipartisan Financial Crisis Inquiry Commission will be modeled after the 9-11 Commission, which thoroughly and independently investigated the failures leading up to the September 11, 2001, terrorist attacks and made sound recommendations on where we needed to improve to prevent another attack in the future.
Likewise, the Financial Crisis Inquiry Commission will have until December 2010 to investigate all the circumstances that led to this financial crisis. The panel will have the authority to refer to the U.S. Attorney General and state attorneys general any evidence that institutions or individuals may have violated existing laws. At the end of its investigation, the Commission will report its findings and conclusions to the Congress and the President.
This bipartisan Commission will include two appointees each by the Speaker of the House and the Senate Democratic Leader as well as one appointee each from the House Republican Leader, the Senate Republican Leader, the Chairman and the Ranking Member of the Senate Banking, Housing and Urban Affairs Committee, as well as the Chairman and the Ranking Member of the House Financial Services Committee.
The Speaker and Senate Democratic Leader will choose the commission’s chair. The Senate and House Republican Leaders will select the vice-chair. Members of Congress as well as federal and state employees are prohibited from serving on the Commission.
I believe we must not rush to legislate and regulate without all the facts. This legislation will help Congress understand exactly what happened to our financial system and why. I firmly believe a bipartisan and independent commission is best way to investigate what led to the failures in our banking system.
E-mail: http://isakson.senate.gov/contact.cfm
