Bipartisan 'Pay It Back' Plan Would Ensure Returned Bank, Housing Emergency Spending Is Used to Pay Down Debt, Not Fund Further Spending
Washington, DC - With the U.S. Senate expected to take up the Budget for the upcoming fiscal year in the next few weeks, Senators Michael Bennet (D-CO), Bob Corker (R-TN) and Jon Tester (D-MT) are telling Senate budget leaders to ensure funds repaid by beneficiaries of taxpayer-funded emergency spending are used to pay down the debt, not fund further deficit spending. The Senators urged the Senate Budget Committee to adopt the Pay It Back plan as part of the Senate's Budget, and noticed an intent to file an amendment that mirrors Bennet's Pay It Back Act, which requires returned emergency spending to go towards deficit reduction, if budget leaders don't include Pay It Back provisions as part of the Budget.
As our economy begins to recover, and as emergency spending used to stabilize these companies begin to be repaid to the federal treasury, Bennet, Corker and Tester are working to ensure recaptured funds and unused monies from taxpayer-funded efforts to stabilize the economy are used to pay down the national debt, which now stands at over $12 trillion.
"Last year, the American people were forced to fork over billions to prop up an economy brought to its knees by Wall Street's greed and incompetence - now it's time to pay the American people back," said Bennet. "As bailout funds find their way back into the federal treasury, we need to ensure they are used to help pay down the debt, not fund further spending that will deepen the deficit and constrain our kids' choices."
"Congress authorized TARP to prevent a cataclysmic financial collapse with an explicit directive and promise to the American people that all proceeds would be used to pay back taxpayers through debt reduction, so it makes sense that returned TARP funds as well as proceeds from sold Fannie Mae and Freddie Mac securities and unobligated stimulus funds should be used to reduce our debt rather than to increase government spending," Corker said.
"Main Street should never have to pay the price for greed on Wall Street," Tester said. "That's why I'm against bailouts. And that's why I support the Pay it Back Act. It's time we use that money to pay down the national debt."
Specifically, the ‘Pay It Back' Plan captures funds from taxpayer investments in financial institutions and auto companies through the Trouble Asset Relief Program (TARP), taxpayer investments to stabilize Fannie Mae and Freddie Mac, and unused stimulus funds and makes sure that these funds are used to pay down the national debt. It also establishes a sunset for unused stimulus funds.
The Bipartisan Pay It Back Plan would:
- Get Taxpayers' Money's Worth from TARP - As financial institutions regain their health, the Pay It Back Act captures repaid TARP funds and applies those funds for deficit reduction. This includes revenues generated from the sale of Chrysler and GM stocks. This new legislation also closes TARP's $700 billion revolving door of credit. Although some companies have already repaid assistance, TARP currently allows the Treasury to keep $700 billion "outstanding at any one time." The Pay It Back Act closes this loophole.
- Get Taxpayers' Money's Worth from Fannie Mae and Freddie Mac - The Pay It Back Act requires returned investments from the sale of Fannie Mae and Freddie Mac stock or securities to be used for deficit reduction. It also requires the Federal Housing Finance Agency (FHFA) to provide a report to Congress on efforts to ensure the American taxpayer does not suffer unnecessary losses.
- Exercise Responsible ARRA Oversight - The Pay It Back Act requires inspectors general and agency secretaries to identify and capture any American Recovery and Reinvestment Act (ARRA) funds that have been turned down or unobligated and directs such funds to pay down the national deficit.
- Establish an ARRA Sunset - The Pay It Back Act ensures that ARRA funds not used by December 31, 2012, will be returned to the Treasury and used to pay down the national deficit.
- Reduce the National Debt - The Pay It Back Act amends the U.S. Code to reduce the national debt limit - which was raised under TARP and ARRA - by every dollar that is repaid through the bill's enactment.
The Pay It Back Act, introduced last year, does not undermine emergency and recovery efforts. Rather, it sets a schedule for getting the government out of the business of owning businesses. This bill looks at critically open-ended policies - created to weather a real economic disaster - and establishes a responsible ‘exit strategy' that will protect and benefit the American taxpayer.
The Pay It Back Act is cosponsored by Bennet, Corker, Tester, Mark Udall (D-CO), Lamar Alexander (R-TN), Russ Feingold (D-WI), and Johnny Isakson (R-GA).