Government Fails When We Ignore Constitution

GOVERNMENT FAILS WHEN WE IGNORE CONSTITUTION -- (House of Representatives - September 26, 2008)

Ms. FOXX. Mr. Speaker, this week we have been focused on what has been described as the most critical situation facing our economic status in our country since World War II. The liberals/Democrats say it is a failure of the markets. It is not a failure of the markets. It is a failure of our government. It is caused by ignoring the Constitution and by getting the Federal Government involved in things it should not be involved in.

If we are about to allow the very people who got us into this mess by promoting the bad policies, especially Fannie Mae and Freddie Mac, to design the cure, then in common parlance, we are about to let the fox guard the hen house.

Another point that needs to be made relative to this situation is that the Democrats in the House have been doing their best to blame House Republicans for the fact that a bill to solve this problem was not passed this week. What has to be said over and over again is that the Democrats are in charge, in control, of both Houses of Congress. They can pass any bill they want without a single Republican vote and have done so on hundreds of bills in the past 20 months, including several times today.

But suddenly, the Democrats want to make this situation the responsibility of the Republicans. Most Republicans want to have no part of any further slide into socialism that the legislation the Democrats are likely to present to us will represent.

The Republicans have presented alternatives that will not be allowed to be considered. But like many of my colleagues, I feel that God holds us guilty for sins of omission as well as sins of commission. Therefore, I think it is important that we raise the issues, that we discuss the situation, and that we present alternatives.

One very thoughtful person has given us the benefit of his wisdom and advice in this situation, and that person is John Allison, chairman and CEO of the very successful Branch Banking & Trust, known as BB&T, which is headquartered in Winston-Salem, North Carolina. I will share some of his comments and put into the Record his letter of September 26.

The letter is addressed to me.

``Unfortunately, while under normal circumstances, there would be a free market solution, given the publicity and psychological mindset which is being created, Congress not acting is extraordinarily risky. Therefore, an alternative to the Paulson plan must be developed. A much more effective, far less expensive solution to the financial crisis than the Treasury Secretary presented is outlined below.''

As I said, I won't read all of the letter, but I want to highlight some important points. He underlines these, and I do, too.

``Without Freddie Mac and Fannie Mae and the affordable housing program (subprime), we could never have made a misallocation of capital of this magnitude.''

Again, Mr. Speaker, the problem lays directly with the Democrats who pushed Fannie and Freddie and refused to allow Republicans when they wanted to bring them under control. Let me share the end of his letter.

``By the way, the reason Bernanke and Paulson cannot see the solution is they are making a fundamental epistological (thinking) error. Bernanke is thinking from economic theory and Paulson is thinking from a capital market theoretical perspective. To solve the problem, we have to deal with the real physical world, i.e., the fact that there is a physical inventory of houses that needs to be cleared, and we must grasp what motivates real individuals (not theoretical collectives) to act.

``A carefully designed housing tax credit and ending fair value accounting (as currently implemented) will fix the real estate markets, capital markets and the economy. This program will likely actually increase tax revenue by stimulating the economy by increasing taxable income. There is likely to be net gain to the government.

``I hope you will give this issue serious consideration.''

We have solutions available to us if we will follow them.

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