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March 28, 2014
Committee Holds First in a Series of Hearings on the Impact of the National Debt On Tuesday, the Financial Services Committee held a hearing on the threat posed by our nation's rising national debt. Tuesday’s hearing was the first in a series of hearings the committee has planned to focus attention on the harmful impact the debt has on economic growth, jobs, national security, and the federal government’s ability to fund discretionary spending and entitlement programs. "Recently, I saw in the newspaper a headline that read, ‘Debts, deficits - once a focus – fade from agenda.’ Shame on us if we allow that headline to prove accurate. In the last six years we’ve accumulated more national debt than we did in our nation’s first 200 years. We’re experiencing debt to GDP ratios not seen since the aftermath of World War II. That level of debt was episodic and temporary; today’s is structural and unsustainable. As a veteran of the Super Committee, Simpson-Bowles, and now chair of this committee, my laptop is regrettably full of reports describing our debt as ‘unsustainable.’ Yet denial, justification and inaction continue to rule the day," said Chairman Hensarling. "That is why as Chairman I am launching a series of hearings to be focused on the pending debt crisis. There is much at stake. We can no longer allow the debt deniers among us to mask the threat or change the subject. I believe any reasonable examination of history and economics will show that we are indeed headed for a debt crisis. It is the most foreseeable crisis in our nation’s history. As members of the House of Representatives, we can disagree about the solutions to avert the crisis, but we should unanimously agree that debt matters and debt matters today," Hensarling said. Expert witnesses urged Washington to refocus its attention on the debt crisis. “For those who think this is just a Wall Street problem, look at it this way: When 10 year Treasury notes go to seven percent, and as a result home mortgages go to 10 percent and car loans to 13 percent, families will have fewer dollars,” said David M. Cote, Chairman and CEO of Honeywell, in his testimony.“That’s now a Main Street problem.” The witnesses agreed that low-income Americans would be some of the most hurt if Washington fails to act now and change our fiscal path. Allegations of Discrimination and Retaliation Against CFPB Employees to Be Focus of Hearing Next Week Allegations that the CFPB has engaged in discrimination and retaliation against its employees will be the subject of a Financial Services Committee Oversight and Investigations Subcommittee hearing next week. The subcommittee hearing comes amid reports, first published in the American Banker, that CFPB managers “show a pattern of ranking white employees distinctly better than minorities in performance reviews used to grant raises and issue bonuses” and that “management has been accused in several cases of favoring Caucasian men and of creating a hostile work environment.” "The revelations uncovered in the American Banker story are extremely troubling,” said Chairman McHenry. “Coupled with the significant number of discrimination claims filed by CFPB employees, this raises serious questions about the management of the Bureau.” MEMBER SPOTLIGHT Rep. Mike Fitzpatrick | Fitzpatrick Highlights Newtown, PA Student Letters in Financial Services Hearing “Mr. Chairman, these letters have all been received in my office since January this year – and they’re all about the national debt. The interesting thing about these letters is that every one of them was written by a teenager concerned about the national debt,” said Congressman Fitzpatrick. Weekend Must Reads Dallas Morning News | Chairman Hensarling "National Debt Matters in a Big Way" 'Debt matters — and we can’t keep waiting for the next election or next generation to tackle it. To quote a Kenny Chesney song, “Everybody wants to go to heaven … but nobody wants to go now.” If we don’t “go now,” it’s not just our children, but many of us who will soon live in smaller homes, compete for fewer jobs with shrinking paychecks, live in a less secure America, and be limited to small, timid dreams. This is America. We can and we must do better. Wall Street Journal | Obama's IMF Gambit One of President Obama's favorite legislative gambits is wait and hurry up. Witness his attempt, which failed Tuesday in the Senate, to link urgent aid for Ukraine to International Monetary Fund changes negotiated by G-20 countries four years ago. American Banker | DOJ’s 'Operation Choke Point': An Attack on Market Economy History teaches that when government bureaucracies try to direct economies, stifled creativity, distorted markets and low economic growth are inevitable results. One of the easiest and most insidious ways for bureaucrats to control the U.S. economy is through the banks, directing who gets – and who can't get – loans and other essential banking services. That's happening today, and it ought to alarm and frighten all of us. Investor's Business Daily | Reaganomics Vs. Obamanomics: Two Wholly Different Outcomes Contrary to President Obama's prescription of more government spending and regulation, President Reagan diagnosed government as the problem and prescribed a plan of lowering tax rates and reducing regulations to free firms and workers from disincentives to invest and work.
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March 27, 2014
House Financial Services Committee Chairman Jeb Hensarling is trying to draw attention back to the nation’s mounting debt ahead of midterm elections that are more likely to revolve around Obamacare. The Texas Republican scheduled a series of hearings on the debt, he says, after reading a newspaper article that noted that the national debt had faded from the agenda. He held the first hearing Tuesday, inviting experts to testify on the debt and warning in his opening statement that “unsustainable levels of debt are harming our country today as we speak.” In making the case that the debt is harming the economy, Hensarling warned that the interest on the debt is expected to cost $233 billion in 2014, more than seven times “the requested annual budget for the National Institutes of Health. Let us reflect upon all the childhood cancer studies going unfunded today because of our national debt.” Sign Up for the Politics Today newsletter! More broadly, Hensarling expressed concern that interest payments, the rising cost of retirement programs as the baby boomers age, and increasing health care costs could crowd out other spending priorities. "Is entitlement spending going to be the ‘blob’ that ate discretionary government?” he asked. Alice Rivlin, a Brookings Institution scholar testifying at the hearing, responded, “I think it already has been. In my view we’ve already cut discretionary spending to unsustainable levels.” Rivlin, who served as a budget adviser to President Bill Clinton, noted that the Clinton administration prepared a deficit reduction plan in 1993, when rising interest rates forced net interest payments to 14 percent of total government spending. “We were worried that unless we reduced the deficit and the projected build-up of debt, we would end up having to raise taxes or cut other spending just to pay the increasing debt service,” Rivlin said, adding that “the chances of getting into a similar bind are higher now” because of the higher level of debt. The federal deficit fell from $1.1 trillion in 2012 to $680 billion in 2013, with the Congressional Budget Office expecting a further decline to $514 billion in fiscal 2014. But the public debt is 72 percent of U.S. economic output, and projected to be 79 percent and rising in 2024. In the long run, the CBO projects the debt, driven by the rising cost of entitlement programs, to continue growing, to 110 percent of GDP in 2038. Over the next 10 years, the CBO anticipates that mandatory spending — automatic spending on entitlement programs such as Medicare and Social Security — will continue to rise, as will the cost of interest payments on the debt. Discretionary spending, which is all appropriated spending, including for defense programs, will drop from 7.2 to just over 5 percent of GDP.
As for interest payments, they are currently relatively low, at 6 percent of all government spending. That is thanks to a depressed economy and the Federal Reserve’s efforts to lower rates through quantitative easing. But the Office of Management and Budget sees net interest costs rising again over the course of the decade as the economy improves, rates rise and the Treasury refinances the debt. Interest payments as a share of federal spending is expected to double, to nearly 12 percent, or $550 billion, by 2019 — assuming no adverse market reaction at any point. Democratic minority whip Steny Hoyer of Maryland raised concerns similar to Hensarling’s on Monday, saying at a speech in Washington that “without action, we will be a nation that can’t invest in its own people” because of rising mandatory and interest spending. “Every dollar we spend on interest is a dollar we can’t spend on Head Start, nutrition assistance, job training, infrastructure, innovation, support for public schools and early education, and other investments that help more of our people make it in America,” said Hoyer, noting that “those investments are already being crowded out.” Hoyer also cited a report from the left-of-center think tank Third Way that found that the federal government spent $3 on public investments for every $1 it spent on entitlements, but that ratio was reversed by 2012, and projected to fall to one-to-five by 2022.
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March 27, 2014
From House Republican Conference:
On Tuesday, the House Financial Services Committee convened a hearing examining our nation's debt and why it matters. Witnesses included David M. Cote, Chairman and CEO of Honeywell; Alice Rivlin, former Director of the Congressional Budget Office; and Douglas Holtz-Eakin, President of the American Action Forum. In this week’s Committee Spotlight, Chairman Jeb Hensarling (R-TX) provides a recap of the hearing, plus key clips of witness testimony.
Please also see below the Read Out from the Hearing: House Financial Services Committee Examines the Impact of our Nation's Debt On Tuesday, March 25, the House Financial Services Committee held a hearing on why the national debt matters. This was the first in what will be a series of hearings focused on the threat posed by our nation’s spending-driven debt crisis that the committee will hold this year. Our nation is on an unsustainable fiscal path that leads to national bankruptcy – driven by spending money we don’t have. Over the next 10 years, according to CBO’s baseline estimates, spending will grow as a share of GDP by 10% while revenues will grow by only 5%. Republicans and Democrats in Congress can disagree on what the federal government spends money on or the appropriate level of revenue, but everyone should be able to agree that when spending grows at twice the rate of revenue – that’s a serious problem. The national debt is merely a symptom, the disease is out-of-control spending. To quote President Obama, the "major driver of our [debt]...is Medicare and Medicaid and our health care spending. Nothing else comes close." The only way we will solve our nation's debt crisis is to stop spending money we don't have and to get serious about reforming our nation's entitlement programs. The threats posed by our spending-driven debt crisis are not academic; they have real world implications for the daily lives of the American people. Failure to deal with our nation's out of control spending and unsustainable debt poses a threat to jobs, our economy, and our national security. According to CBO’s Long-Term Budget Outlook, a large and growing debt would have “significant negative consequences for both the economy and the federal budget.” Admiral Mike Mullen, former Chairman of the Joint Chiefs of Staff, said, “I think the biggest threat we have to our national security is our debt.” According to the Heritage Foundation, in 2030, entitlements plus interest will consume ALL tax revenues – requiring spending on every other federal priority, from the National Defense to Food Stamps and to housing vouchers, to be borrowed. Witnesses at Tuesday’s hearing included public and private sector experts who discussed the harm our rising national debt has on our economy. Some of the key statements from these witnesses include: David M. Cote, Chairman and CEO of Honeywell: “For those who think this is just a Wall Street problem, look at it this way: When 10 year Treasury notes go to seven percent, and as a result home mortgages go to 10 percent and car loans to 13 percent, families will have fewer dollars. That’s now a Main Street problem.” Alice Rivlin, a former Congressional Budget Office Director who also served as director of the Office of Management and Budget and is now with the Brookings Institution: ““High levels of debt increase our vulnerability to shifts in investor confidence and the whims of foreign governments. With substantial fractions of U.S. Treasuries held by foreign governments and central banks, this is a serious concern and can limit our foreign policy flexibility.” Douglas Holtz-Eakin, President of the American Action Forum and a former director of the Congressional Budget Office: “The federal budget outlook is quite dire, harms economic growth, and ultimately raises the real threat of a sovereign debt crisis. The severity of the consequences of an eventual crisis, rather than the capacity to predict its exact timing, should induce the urgency to address it, and hearings such as this advance that goal.” The national debt is the single greatest existential threat facing our nation and it is a disservice to the American people not to put this threat front and center of every debate in Washington.
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March 26, 2014
On Tuesday, the Financial Services Committee held a hearing on the threat posed by America’s rising national debt. Tuesday’s hearing was the first in a series of hearings the committee has planned to focus attention on the harmful impact the debt has on economic growth, jobs, national security, and the federal government’s ability to fund discretionary spending and entitlement programs.
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March 16, 2014
To mark Sunshine Week, Financial Services Committee Chairman Jeb Hensarling (Twitter | Facebook) delivers this week’s Sunday Video Message on the lack of transparency at the CFPB.
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March 14, 2014
By Rep. John Campbell
Chairman of the Subcommittee on Monetary Policy and Trade The Obama Administration is deliberately holding up economic assistance to Ukraine by trying to make permanent a temporary U.S. investment in the International Monetary Fund. The Administration is not being honest about what the IMF quota increase would actually mean for Ukraine, nor is it being transparent with the American people on the risks that this new investment will carry. The fact is that the IMF currently has assistance programs that would allow Ukraine to borrow billions of dollars, and would have the added benefit of being paired with much needed technical assistance. The Administration’s push to make additional funds available through the IMF’s Rapid Financing Instrument (RFI) does nothing to correct the serious structural challenges that will continue to face the Ukrainian economy. In fact, increased access to the RFI would merely provide one month’s worth of assistance to Ukraine. This is not a serious approach towards providing the kind of relief that Ukraine needs. Additionally, the loan guarantees that the House passed last week would provide more than double the assistance that the marginal increase in RFI access would provide. The fact of the matter is that Ukraine needs more sustainable financial assistance and serious economic reforms. We have seen in the IMF’s experience with Greece that by not forcing private creditors to shoulder significant losses, debt burdens could remain unsustainable even with an IMF loan. The Administration should be forcing these creditors to the table, many of whom are Russian, in order to negotiate a debt restructuring. Failing to do so is effectively allowing the IMF to perform a backdoor bailout of Russian investors. The Administration argues that by ratifying the increase in quota, the IMF will implement some governance changes. What the Administration is not saying is that the governance changes only incrementally address a fundamental problem of outsized European influence on the Board of Directors. Even if the reforms are implemented, Europe would continue to have at least six times more representation than the United States. Europe has wielded this influence to force the IMF to shoulder more of the financial burden in European bailouts, sparing losses for European banks. If the Administration wants to have an honest discussion about its role in the IMF, the role of the IMF in the world, and what should be done to improve its governance, then we should engage in these debates in a thoughtful manner removed from the pressure of quickly providing assistance to Ukraine. Congress only recently received an official request from the President on the quota increase, when he included it in his late budget submission a few weeks ago. What the Administration should do is seek stronger IMF reforms that include more balanced representation on the Board of Directors and is less reliant on U.S. taxpayer funds.
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March 11, 2014
The House is in session Tuesday through Friday this week.
Here’s what’s happening: On Wednesday at 10:00 a.m. the Monetary Policy and Trade Subcommittee will hold a hearing to examine the Federal Reserve’s role in credit allocation. This hearing is part of the Committee’s Federal Reserve Centennial Oversight Project to bring accountability and transparency to the Federal Reserve. On Thursday at 10:00 a.m., the Full Committee will markup five bills to provide regulatory relief for America’s small businesses and community financial institutions. These bills will help job creators throughout America navigate through a sea of red tape and ill-advised Washington regulation. The following bills will be considered:
Be sure to check back here on the Bottom Line Blog -- and sign up for our email updates -- for additional information throughout the week.
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March 07, 2014
…Wasting Millions on Office Renovations
…Under Investigation …Closed Door Meetings …Shocking Report of Discriminatory Treatment …In Urgent Need of House-Approved Accountability, Oversight and Reform Bill American Banker, 3/6: CFPB Staff Evaluations Show Sharp Racial Disparities “CFPB managers show a pattern of ranking white employees distinctly better than minorities in performance reviews used to grant raises and issue bonuses. Overall, whites were twice as likely in 2013 to receive the agency's top grade than were African-American or Hispanic employees, the data shows. “What's more, those disparities are only one of many serious personnel problems plaguing the CFPB. Inside the agency, morale is poor and management has been accused in several cases of favoring Caucasian men and of creating a hostile work environment.” American Banker, 3/6: Hensarling Probes CFPB on Employee Complaints, Evaluations “House Financial Services Committee Chairman Jeb Hensarling and two other GOP lawmakers are probing the Consumer Financial Protection Bureau over how it treats its employees. “The lawmakers seized on an article by American Banker that revealed data showing that the agency’s white employees had a greater likelihood of receiving the highest rating in performance evaluations — which determine salary increases and bonuses — than minorities.” National Review Online, 3/6: Do As We Say, Not As We Do “The CFPB likes to use the ‘disparate impact’ approach in its regulation of banks, but the American Banker has obtained data showing that the Bureau’s own employment practices might not fare very well under this approach.” Washington Examiner, 3/7: CFPB to Pay $22.3 Million to Lease Building Owned by Obama Bundler “Controversy has dogged the CFPB for more than a year for nearly tripling the initial $55 million cost estimate for renovations to the building that will serve as the bureau's permanent headquarters.” “The agreement requires CFPB to pay GSA more than $1.6 million for August and September 2013, more than $9.8 million from October 2013 through September 2014, nearly another $10 million through September 2015 and more than $800,000 for October 2015. “The bureau must make those payments even though it won't begin moving into the temporary space until this spring.” Investor’s Business Daily, 2/25: What is Obama’s Consumer Credit Agency Hiding? “Even after a Mississippi businessman last year was bounced from what should have been an open meeting of the Consumer Financial Protection Bureau, the agency again is making itself closed to the public. “On Wednesday and Thursday, CFPB Director Richard Cordray and other top bureau officials will meet behind closed doors with a group of radical advisers who are having undue influence over financial regulatory policy. Both the public and the press again are barred from covering the private discussions.” Washington Examiner, 2/14: Federal Reserve Inspector General to Probe Spiraling Building Renovation Costs at CFPB “Federal Reserve investigators want to know why renovation costs for the Consumer Financial Protection Bureua’s headquarters building have soared to more than three times the original estimate” The Hill, 2/27: GOP Slams Dodd-Frank Panel, Votes for Reform The House voted Thursday to restructure a controversial government bureau created by the Dodd-Frank law, amid GOP accusations that the bureau is not responsive to Congress and plans to waste millions of dollars renovating its headquarters.
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January 30, 2014
6,778 total words. 40 words devoted to housing finance reform. 0 housing finance reform proposals from the Obama administration in 5 years 1 bill in Congress that protects taxpayers from ever again having to foot the bill for a housing crisis by ending the bailout of Fannie Mae and Freddie Mac and explicitly preserves the 30-year fixed rate mortgage. That bill – the Protecting American Taxpayers and Homeowners Act, the PATH Act. “Instead of perpetual bailouts, Americans want meaningful reform of our housing finance system. That is why the House Financial Services Committee passed the PATH Act to give Americans the sustainable housing finance system we need – sustainable for homeowners so they buy homes they can actually afford to keep, sustainable to taxpayers so they will never again have to bail out Washington’s failed housing programs, and sustainable for our economy so we avoid future cycles of boom, bust and bailout. If the president truly believes in the need to address housing finance reform, as he said in tonight’s speech, he has come to the right place.” -- Chairman Jeb Hensarling, 1/28/14
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January 27, 2014
The House is in session Monday through Wednesday this week. Here's what's happening: Commensurate with holding the CFPB accountable, our website now offers individuals a web form to let committee members know how the CFPB has impacted them as consumers, as business owners or how the Bureau has affected their customers. The committee’s web form gives individuals the choice of having their story shared publicly or kept confidential. See our press release for more information about the web form. Also on Tuesday, at 9 p.m., President Obama will deliver his State of the Union address. Be sure to follow us on Twitter @FinancialCmte for our reactions during and after the president’s speech. Also, be sure to check back here on the Bottom Line Blog -- and sign up for our email updates -- for additional information throughout the week. |
