Providing For Consideration of H.R. 5486, Small Business Jobs Tax Relief Act of 2010; And Providing for Consideration of H.R. 5297, Small Business Lending Fund Act of 2010

Floor Speech

BREAK IN TRANSCRIPT.

Mr. McCLINTOCK. I thank the gentlelady for yielding.

Mr. Speaker, the supporters of this bill tell us it's going to increase lending to small businesses. To do so, they're creating a $30 billion slush fund to make loans to smaller banks, therefore encouraging smaller banks to make loans to small businesses, or so they say. I believe it is a splendid example of what I like to call McClintock's Second Law of Political Physics: The more we invest in our mistakes, the less willing we are to correct them. It has apparently escaped the supporters' attention that we are already doing precisely what the proposed new Small Business Lending Fund would do through the existing TARP Capital Purchase Program.

Now that's not just my conclusion. That's the conclusion of the Special Inspector General of TARP, Neil Barofsky. He wrote to the Financial Services Committee on May 17, and observed, ``In terms of its basic design, its participants, its application process, and perhaps its funding source, from an oversight perspective, the Small Business Lending Fund would essentially be an extension of TARP's Capital Purchase Program.''

So if this scheme actually worked, we wouldn't need this bill, would we? Banks would already be lending like crazy.

The only problem is, it doesn't work. But some Members can't bear to face the American people and admit that they have squandered billions of dollars of working families' hard-earned money. So, instead, they bring us more of the same.

Now this places an additional $30 billion of taxpayer money at risk. We're told, Don't worry; we'll get that money back.

When have we heard this song before? Oh, yes. When they bailed out Fannie Mae and Freddie Mac. And according to the Congressional Budget Office, taxpayers have now lost $145 billion, heading to $400 billion.

Don't worry; it'll be paid back.

What is likely to happen to the $30 billion put at risk by this bill? Those banks with sound finances won't touch this money. They don't need it, and they don't need the Federal entanglements that come with it. Only those banks whose finances are unsound will accept these moneys, with little chance that they will actually be paid back. In fact, by removing the Special Inspector General from oversight of these funds, that risk is further aggravated.

And just to be clear, there's no guarantee that a dime of this money will actually be lent to small businesses in the first place. In fact, any commercial or industrial loan will count toward the requirements of this bill, not necessarily just loans to small businesses.

Now, after a failed $700 billion TARP, $30 billion might not sound like a lot of money. But let's put it in perspective. The combined cleanup and economic costs of the gulf oil spill are currently estimated around $17 billion. So in terms of economic damage, this bill could actually cost more than cleaning up the entire mess in the gulf. It's true that small businesses are having great difficulty getting loans. So are home buyers. Why is that? I suspect one of the principal reasons is that unprecedented public sector borrowing has crowded out the capital pool that would otherwise have been available to make private sector loans to small businesses and home buyers and consumers.

Under this administration and this Congress, the government is running a $1.5 trillion annual deficit. That's roughly $20,000 for every family of four in America. Well, where does that money come from? Well, we borrow it. From whom do we borrow it? We borrow it from the same capital pool that would otherwise have been available to loan to small businesses and other employers seeking to add jobs or loan to home buyers seeking to reenter the housing market or loan to consumers seeking to afford consumer purchases. And remember, two-thirds of economic growth directly depends upon those consumer purchases. But that money now is not available to loan to employers and to home buyers and to consumers to expand the economy because government has now borrowed it in order to expand government. That is the core of the problem.

Now, I've offered an amendment to forbid the use of this TARP III money in the presence of a deficit for a very simple reason: if the government borrows that money to loan to one business, that same money won't be available to loan to another business. Government cannot inject a single dollar into the economy until it has first taken that same dollar out of that same economy. But of course this amendment was forbidden under the rule we are now considering. Therefore, I oppose the rule, and I oppose the underlying bill.

BREAK IN TRANSCRIPT.

Source