Mr./Madam President – Survey after survey shows that most Americans like their health plan, but they believe it costs too much.

 

That’s why I am concerned that, at a time when the American people are asking for lower health care costs, the trillion-dollar bills Democrats are trying to ram through Congress actually INCREASE the cost of health care.

 

You heard me correctly – the Majority is actually proposing to spend a TRILLION DOLLARS of taxpayer funds on proposals that will increase the cost of health care for Americans.

 

That’s not the kind of reform Americans want.

 

Back in Missouri we call that a pig and poke.

 

The only way to sell a pig and a poke is to hide from Americans what their tax dollars are really buying.

 

That’s why – despite the President’s promise of transparency – the Majority in charge of this Congress are working behind closed doors on complicated, thousand-page bills that would lead to a massive government takeover of health care.

 

Despite the secrecy, we do know some startling facts about these proposals: 

 

First, the nonpartisan Congressional Budget Office – headed by Democrat Doug Elmendorf – has said that the Majority’s government-run plans would actually raise insurance premiums.

 

Despite the pig in the poke the Majority is trying to sell the American people, these independent experts have said that the government-run “public” option that is being proposed would have higher premiums than private plans. 

 

That should come as no surprise, when has more government ever lowered the costs of anything? 

 

Next, we know that these bills would raise taxes on families and small businesses.

 

We also know that these bills would cut Medicare for seniors, leaving our seniors with fewer health care options.

 

The Majority isn’t even denying these charges – they are just hoping no one is paying attention.

 

Also, what the Majority doesn’t want you to know is that under these health care bills, government bureaucrats will have control over decisions that only you and your doctor should have.

 

These are startling conclusions, which is why Missourians are rightfully concerned about the direction we are headed. 

 

Missourians and the people of this country don’t want the same kind of denial, delay and rationing common in countries with government-driven health care.

 

Americans are also concerned with the high price our children and grandchildren will pay for these health care schemes.

 

My constituents are asking why, in the midst of a recession, when unemployment is near 10 percent;

 

Why, when Americans are already saddled with massive federal debt that Majority isn’t listening to their concerns as they move ahead with a vast and costly expansion of government that increases, rather than lowers, the cost of their healthcare.

 

Also, I have also heard concerns about the gimmicks that are being used to claim this bill is deficit neutral like collecting all the taxes and fees long before the plan takes effect and has to be paid for.

 

It’s a great scheme but no one outside of Washington actually believes that a trillion dollar health care bill will do anything but increase costs and pile more debt on our kids and grandkids.

 

In fact, experts have confirmed that there would be shortfalls outside the 10 year budget window.

 

This is just another smoke and mirrors trick to disguise the fact we are heaping massive debt on future generations.

 

Sadly this proposed, trillion-dollar government takeover is just the latest in a string of efforts to expand the government at the cost of our children and grandchildren’s fiscal future. 

 

Already this year, the Administration and the Majority in Congress have: spent a trillion dollars on the misnamed “stimulus” bill; adopted a budget that will double the debt in 5 years and triple it in 10 years; and proposed a $3.6 trillion new gasoline tax.

 

Mr. President, we are all in agreement that health care costs too much, there are too many uninsured and we need reform. 

 

But the question is what does real reform look like and to date we have seen two vastly different philosophies emerge. 

 

For my colleagues on the other side of the aisle reform means a vast expansion of government costing more than a trillion dollars that will increase health care costs, raise taxes and cut Medicare benefits for seniors.

 

Under this kind of reform Americans will end up paying more for less.

 

Our view on this side of the aisle believes reform is common-sense solutions focused on lowering health care costs for families and small businesses.  We’re offering solutions that increase access and improve patient care as well despite what the Assistant Majority Leader stated.

 

Our solution includes tax equity for all families, allowing small businesses to form their own plans across state lines, and ending the waste of $120 billion annually from medical malpractice and defensive medicine.

 

We don’t need a government overhaul of health care to give the American people what they want.  What we need is for Democrats to stop ignoring the will of the American people and start working with Republicans on real reforms that can make a difference right now.

 

Reform that will lower costs, increase access, and improve patient care.  That’s what Americans want, and that’s where our focus should be.

 

 

Mr. President, in addition to speaking out against the health care pig in a poke Democrats are trying to sell the American people, another example is continuing and expanding the home-buyer tax credit provision.

 

Let me start out by stating that I originally supported the creation and first extension of the home-buyer tax credit.  Unfortunately, these days it seems like the fastest way to make something permanent is to have Congress legislate a temporary program. 

 

As a long-time housing advocate, I believed a TEMPORARY credit, combined with other tools such as housing counseling and refinancing efforts by state housing finance agencies would help in the stabilization and recovery of the housing market.

 

Like many of my colleagues, I believed that it was critical to address the housing market that was at the root of the credit crisis and led to our recession.  However, the housing crisis has evolved from a crisis caused by loose lending through risky subprime loans to a crisis where job loss has become the primary cause of foreclosures and delinquencies.

 

But for several reasons, I strongly believe the home-buyer tax credit must end – primarily the disturbing news about fraud in the program and the high cost to taxpayers.

 

Before voting for yet another extension, I hope my colleagues ask themselves whether, based on its track-record, the home-buyer tax credit an effective tool in helping the housing market?  It is clear that the answer is NO due to its high cost and vulnerability to fraud.

 

News about the real cost to taxpayers of this program is alarming.  In reality, this $8,000 home-buyer tax credit costs taxpayers at least $43,000 per home sale using the most generous assumptions.  According to the Brookings Institution, the vast majority of home-buyers who used the credit would have bought a home without it and at best, the credit simply brought forward home sales that would have occurred in the future.  The Brookings Institution estimates that only 15 percent or 350,000 sales were directly attributable to the tax credit.

 

If we use Goldman Sachs’s less generous estimate that only 200,000 sales were directly caused by the credit, the cost to taxpayers rises to $80,000 per sale. 

 

For the vast majority of cases, the home-buyer tax credit amounted to a free gift since it did not affect their decision to purchase a home.  As described in a September 19, 2009, editorial by the Washington Post, the tax credit simply moved around the demand to purchase homes – from future to present, and from other consumers and other sectors to home-buyers and homes. 

 

And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place.  In the face of these figures, it seems obvious the home-buyer tax credit is a terribly inefficient, irresponsible, and poor use of scarce taxpayer resources.

 

The proposed expansion of the home-buyer tax credit, if continued, will affect only one out of 5 new buyers that will most likely put even greater cost to taxpayers.

 

Even worse than inefficient use of taxpayer dollars is the misuse of taxpayer funds in this program.  With the lack of oversight and uncovered fraud in this program, extending this credit would result in throwing away billions in taxpayer dollars. 

 

The evidence of fraud in this program was reported by the Treasury Inspector General for Tax Administration (TIGTA).  According to the Inspector General, the IRS is investigating more than 100,000 suspicious and potentially fraudulent claims involving tax credit.  In addition, the IRS and federal law enforcement authorities are investigating 167 criminal schemes involving the credit. 

 

Further, the Inspector General uncovered some disturbing cases of fraud where children (as young as 4 years old) and illegal immigrants claimed the credit. 

 

And even more disturbing – the Inspector General found that found that IRS employees illegally or improperly used the credit – sounds like the fox guarding the hen house.

 

It is, therefore, not surprising that one low-income tax aide recently testified before a congressional panel that the abuse of the credit appeared to be wide-spread.

 

Legislative changes are being included to address the fraud and I appreciate these efforts but it is unrealistic to believe that they will be successful due to the long-standing management and oversight challenges of the IRS and the rampant fraud in the market-place. 

 

My colleagues on the Finance, Appropriations, and Homeland Security and Government Affairs Committees are very familiar with the IRS’s tax administration short-comings that have been well-documented by the Inspector General and the Government Accountability Office.

 

When I chaired the Treasury, Transportation, HUD, and Related Agencies Appropriations Subcommittee, I too became familiar with IRS tax administration challenges.  I also am very familiar with other housing fraud cases due to my long-time involvement with the FHA. 

 

As I learned, waste, fraud, and abuse cannot be stopped no matter how many “thou shall nots” are included in legislation.  In the case of the home-buyer tax credit, it is nearly impossible to stop fraud when those who are supposed to prevent fraud are actually committing fraud!  And with the FBI reporting that mortgage fraud is at a level even higher during the subprime boon, we are kidding ourselves if we think we can prevent more fraud and more taxpayer losses.

 

The most effective means of preventing fraud is to simply not extend the credit.  That was the approach taken by the Congress to stop finally the waste, fraud, and abuse of the so-called FHA seller no-downpayment program.

 

Finally and perhaps most troubling is that we are going down the same path that led us to the subprime crisis.  The previous two Administrations tried to prop up home prices through government incentives and programs similar to the tax credit, which contributed to the housing bubble.  No-downpayment programs led to the explosion of foreclosures, turning the American Dream into the American Nightmare.  If a family does not have enough money for downpayment, they often cannot cover unexpected housing costs, which always happen.  Are we going down the same road with the home-buyer tax credit? 

 

Does anyone remember 1995 President Clinton’s 1995 “National Homeownership Strategy” in which he charged the Department of Housing and Urban Development (HUD) to work with leaders in government and the housing industry to increase homeownership to a new record-high level?

 

Have we forgotten President Bush’s 2002 “America’s Homeownership Challenge” and 2004 “ownership society” initiative to work with the real estate and mortgage finance industries to help boost the homeownership rates of minorities with the goal of increasing the number of minority homeowners?

 

How did the government actually encourage homeownership?  The government used a number and variety of tools, such as tax incentives and easing access to financing for borrowers through entities such as Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).

 

The tax code already provides generous incentives to encourage homeownership through the mortgage interest deduction, property tax deduction, and capital gains tax exclusion.  The Joint Committee on Taxation estimates that for 2008 these tax incentives totaled just over $108 billion.

 

Through the implicit backing of the federal government and its own tax advantages, Fannie Mae and Freddie Mac were used to boost homeownership by improving access to credit for borrowers.  For low-income borrowers, the government pushed Fannie and Freddie to increase its purchases of the riskiest loans, such as “alt-A” and subprime mortgages.  The riskiest loans eventually accounted for about 15 percent of Fannie and Freddie’s portfolio, which included a significant amount of subprime loans originated by lenders like Countrywide.  Not surprisingly, Countrywide became Fannie Mae’s top business partner accounting for about 28% of Fannie’s loan portfolio in 2007.

 

FHA also was used by the government to encourage homeownership by insuring loans at virtually no risk to lenders and with little or no downpayment by borrowers – in other words, with little “skin in the game.”

 

With the implosion of the private subprime industry and the credit crunch, the government – through Fannie, Freddie, and FHA – has become the primary source of mortgage financing.  The Federal Reserve Bank recently estimated that the federal government now accounts for 95 percent of the mortgage market.  In other words, the nation’s mortgage market has been effectively federalized and all of the risk is now concentrated in the hands of the taxpayer.

 

As we saw with previous housing bubbles, the taxpayer ends up bearing the brunt of the costs and the government ends up holding foreclosed properties.  The last time I checked, the government did not do a good job of being a landlord.  To get a better understanding of this problem, I urge my colleagues to read the Congressional Quarterly Weekly cover story from July 7, 2008, entitled “FHA Guarantees Not a Panacea.”

 

By pushing and subsidizing homeownership, the government has turned the American Dream into a nightmare for homeowners, neighbors, communities, the global financial system, and taxpayers.  But instead of learning from past mistakes, we seem to be repeating them.

 

Even without the tax credit, the government already has taken unprecedented steps to stabilize the housing sector.  To hold down mortgage rates, the Federal Reserve has bought hundreds of billions of dollars worth of mortgage-backed securities.  The Treasury has taken on the debts and operational losses of Fannie Mae and Freddie Mac, which own or guarantee a combined $5.4 trillion in mortgages.  We have replaced private subprime lending with the government’s version of subprime through the FHA by expanding their business in several ways, such as the enactment of “HOPE for Homeowners” and increased loan limits. 

 

Not surprisingly, FHA’s losses have dramatically increased and its capital reserves are expected to fall below the legal minimum.  Some experts believe that the taxpayers will have to bailout FHA at a cost of between $54 billion to $100 billion.

 

The damage caused by the public-private partnership of boosting homeownership and distorting housing prices through generous taxpayer subsidies cannot be denied.

 

As Economics Professor Edward Glaeser from Harvard wrote: 

 

“Subsidized lending has encouraged millions of Americans to leverage themselves wildly to bet on the housing market.  All that betting helped to create the bubble that has now popped.  Lending more cheap money would be like a gambler doubling down and hoping for a win next time.”

 

With trillion dollar deficits facing our nation over the foreseeable future and beyond, betting taxpayer funds on the home-buyer tax credit is more than a bad bet, it is irresponsible.

 

So the question I ask my colleagues is:  why are we continuing these debt-fueled policies that led to our housing and economic troubles?  Why do we keep using taxpayer dollars to distort and manipulate the housing market?  What is our exit strategy from the massive federal government take-over of housing finance?

 

Perhaps the answer lies in the words of Josh Rosner, a managing director at Graham Fisher, an investment research firm in New York and a well-respected expert on mortgage securities.  He stated “We’ve created a society where we love the term homeownership, yet we can’t allow people to understand that they are being taken advantage of by the term.”

 

I ask unanimous consent to include in the record, the Washington Post editorial from September 19 and an article by Professor Glaeser.

 

            Thank you.