January 7, 2009 CONGRESSIONAL RECORD — HOUSE H61 

bipartisan way, 8 Republicans, 8 Democrats, similar to what we did on the 

Iraq Study Group, frankly, I think this 

Congress will not have the courage, the 

foresight, the ability to vote on these 

issues to deal with it. 

So what we are saying is a massive 

package up-or-down vote, 8 Republicans, 8 Democrats, this bill was drafted by the Heritage Foundation, by the 

Brookings Institution, supported by 

David Walker, supported by David 

Broder, by David Brooks, by economists all over the country, and then it 

uses the language that is in the Base 

Closing Commission that requires, because if you don’t require this institution to act it will not act. It will find 

all the reasons it can to neglect it. It 

will require it to act in 60 days. 

So I say to my colleagues on this 

side, if we’re going to deal with this 

stimulus, we’d better have our own 

ideas and put up for a proposal, which 

I will do unless I’m tied and gagged, I 

will offer a motion here to force us to 

vote on this. 

And I say for the other side, I ask 

you to do the same thing so we could 

come together in a bipartisan way so 

when we leave this Congress we know 

that we have truly dealt with the entitlement issue and saved America for 

our children and our grandchildren and 

future generations. 

f 

OUR ECONOMIC SITUATION AND 

FOREIGN POLICY 

The SPEAKER pro tempore. Under 

the Speaker’s announced policy of January 18, 2007, the gentleman from California (Mr. SHERMAN) is recognized for 

60 minutes as the designee of the majority leader. 

Mr. SHERMAN. I will take much but 

not all of this hour to speak. Roughly, 

the first half of the presentation will 

be on our economic situation. The second half will focus on foreign policy. 

I know that I have a number of colleagues that may have important 

things to say to this House, and if they 

come to the floor, I’ll be happy to yield 

them a few minutes at a time that is 

convenient for them. 

Even with this long speech, I will not 

be able to cover all the details that I’d 

like to provide to my colleagues. 

Therefore, I invite all my colleagues to 

visit the relevant portion of my web 

page, bradsherman.house.gov for more 

of the details of the matters I’ll be discussing here. 

In talking about our economy, I will 

divide my speech first to talking about 

matters relevant to the Financial Services Committee, on which I’ve served 

for 12 years, and particularly the bill 

known as TARP, or EESA, the Emergency Economic Stabilization Act, best 

known to the public as the $700 billion 

bailout bill. 

The second part of my economic presentation will deal with the stimulus 

package now being put together, particularly by the Committees on Appropriations and Ways and Means. 

Now, I was a critic and twice voted 

against the $700 billion bailout bill, the 

so-called TARP. The supporters of that 

bill will have to admit that it has not 

restored our economy as the proponents had advertised, and, in fact, 

some of the worst times for the economy were the 2 to 3 weeks following its 

passage. 

On the other hand, those of us who 

were critics should admit that the bill 

has, frankly, cost the government far 

less than I had anticipated. When I say 

cost, I don’t mean just how much is 

spent, but from that must be subtracted the value of the securities, the 

bonds and the stock certificates received by the Federal Government. 

In this case, Secretary Paulson misled this House and the other body by 

testifying that he would use the $700 

billion to buy toxic assets, bad bonds. 

Had he done that, and all of us voting 

on the bill had every reason to believe 

that he was telling us the truth, had he 

carried out that policy, then he would 

have bought, for the money he had 

spent, whether it’s the 350 billion he 

has spent so far or the 700 billion that 

I feared he would spend, he would have 

spent that money in return for assets 

of dubious value. That’s why they’re 

called toxic assets. 

In contrast, having misled the House 

and the other body, Secretary Paulson 

bought preferred stock in the various 

financial institutions. In doing so, he 

was overly generous to Wall Street as 

to the terms, but, nevertheless, he did 

secure assets for the Treasury that are 

of substantial value. 

Paulson’s shift, frankly, was right 

along the lines that many of us who 

are critics of the bill had urged him to 

adopt. And so those who supported the 

bill, those who are critics of it, must 

both recognize that what the Treasury 

has done so far is far different from 

what all of us believed would, in fact, 

be the policy. 

Now, we see that $350 billion has been 

expended by the Treasury, and another 

$350 billion remains unspent. I am 

pleased that the Secretary of the 

Treasury has not yet taken the procedural actions to release and give himself control of the remaining $350 billion. 

It is my understanding that leadership will bring to this House a bill that 

will release the $350 billion to the 

Treasury and will impose additional 

conditions. And I’d like to take a few 

minutes to address what I think ought 

to be in that bill. 

First, is the issue of whether any of 

the funds to be released, any of that 

second $350 billion, will be available to 

the Bush administration. Last month I 

wrote the chairman of the Financial 

Services Committee saying that we 

should have limits on the amount that 

could be spent by the Bush administration out of the second $350 billion. In 

fact, I proposed that only $10 billion or 

less be available to the Bush administration to deal with whatever exigencies it dealt with in its waning days. It 

is my understanding that the bill that 

will be brought before this House will 

provide the Bush administration with 

$0 to deal with whatever comes up in 

its last week or so in office. 

In any case, I think, having seen 

Paulson in action, the vast majority of 

this House would believe that somewhere between 95 percent and 100 percent of the second $350 billion, if it is 

made available to anyone in the executive branch should be made available 

only to the Obama administration. 

I should point out something about 

process. It would be best if any bill 

dealing with the second $350 billion was 

actually dealt with in regular order. 

Now, I’m not saying necessarily that 

every committee of possible jurisdiction should do a full markup, but as we 

deal with this economic crisis, at least 

the primary committee as to each bill 

should have a markup so that Members 

can be heard, and the House can work 

its will. 

In addition, I would hope that the 

Rules Committee would allow a reasonable number of amendments to be considered on the floor. 

In addition, I would hope that the Financial Services Committee would give 

the same scrutiny to the financial institutions who have received and are 

likely to receive additional bailout 

monies as we gave to the executives of 

the three automobile makers. 

We need extensive hearings. We need 

to bring the titans of Wall Street down, 

and we need to have these hearings at 

both the full committee and the subcommittee level. 

We do not want to give further credence to the accusation that Congress 

and the administration have two standards for scrutinizing bailout requests, 

one for those who shower before work 

and a more severe standard for those 

who must shower after work. We 

should have at least the same amount 

of scrutiny to an industry that has already received the bulk of $350 billion 

as we provided to an automobile industry that is requesting amounts less 

than 5 percent of that amount. 

Now, what should we provide in the 

way of restrictions to those who obtain 

bailout funds or retain the bailout 

funds they have already received? 

Federal dollars should be expended to 

bail out private interests only on the 

toughest terms. Taxpayers should demand the highest yield, the largest equity upside, the strictest limits on executive compensation and perks. Even 

when we bail out individual homeowners rather than big time executives 

and shareholders of major companies, 

the Treasury should get a large share 

of the profit that they earn when they 

sell their homes. 

Why is it so important that we are 

tough on those who seek bailout funds? 

There are three important reasons. 

First, being tough will increase support 

for the program. The public is currently focused on executive compensation and perks. I think it will soon 

focus on the value of the securities the 


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H62 CONGRESSIONAL RECORD — HOUSE January 7, 2009 

Treasury is receiving, including warrants that represent the upside, the potential profits of a company that is receiving bailed out funds. 

b 1415 

We need public support for the enactment, and there is considerable public 

skepticism. In talking to my colleagues, I find very few who are enthusiastic about releasing the second $350 

billion to the executive branch, and I 

find, while most of my colleagues believe that we need a stimulus package, 

there is real reluctance to adopt one as 

large as that being recommended by so 

many prominent economists. We can 

achieve that support in this House and 

in the public by being tough on those 

who receive bailout funds. 

Second, being tough on those obtaining bailout funds will help to limit the 

number of people seeking to be bailed 

out. Not even the Federal Government 

can afford to fund all of the bailouts 

that will be demanded if executives see 

the Federal Government as a source of 

easy and cheap money. 

Third, getting a good deal by tough 

negotiations with anyone receiving a 

bailout will reduce the amount by 

which we are increasing the Federal 

deficit. We will be expending hundreds 

of billions of dollars now. I’m just addressing the $700 billion piece that is 

half completed. There will be other expenditures. We need to reassure our 

children, and we need to reassure the 

international markets that we are acting responsibly to minimize the increase in the Federal deficit. 

Now, some of the expenditures being 

made out of the TARP funds are going 

to be money lost forever. It’s going to 

be buying assets that turn out to be 

worthless or investing in companies 

that go bankrupt. That is why we need 

a very large upside on those of our investments that are successful. Typically, the Federal Government obtains 

an upside by obtaining warrants from 

the companies it provides bailout funds 

to. These allow the taxpayers to reap 

the benefits of a company’s success 

when it returns to profitability and 

when that profitability is reflected in 

its stock price. 

I believe that, in the negotiations 

with Wall Street, Secretary Paulson 

has been far too generous to his friends 

in the financial services industry. 

Given the tremendous risks the Federal Government is assuming, taxpayers should be receiving far more of 

the upside in return for their investments. 

For example, in the recent bailout of 

Goldman Sachs, the taxpayer received 

half the rate of return and one-sixth 

the warrants that investor Warren 

Buffett was able to receive on a similar 

investment that he made in Goldman 

Sachs for his fund. 

The Emergency Economic Stabilization Act gives the Treasury too much 

discretion as to what to demand in the 

way of warrants. While the Treasury is 

required to obtain warrants when it injects capital into financial institutions, it can accept as few warrants as 

it likes. 

The Treasury has adopted a one-sizefits-all approach, which provides the 

Federal Government with warrants 

equal to 20 percent of its investment 

when it buys preferred stock in a financial institution. Not even this 20 percent is required by the statute, and 

this 20 percent is often way too low because those healthiest banks on Wall 

Street were willing to give us 20 percent. Clearly, the riskier banks on Wall 

Street that got bailout funds were not 

adequately compensating the American taxpayer for the risk we are taking because they only provided 20 percent warrants, a figure that might be 

appropriate for those financial institutions that are low risk. 

The question is: What can we do in a 

statute? Clearly, we hope that the next 

Secretary of the Treasury will drive a 

tough bargain whenever investing our 

taxpayer dollars in private firms, but 

we can do something in the statute. 

At a minimum, we should include 

language that was in an early version 

of the House bill dealing with the automobile relief that requires warrants of 

at least 20 percent, and we should make 

it clear that this 20 percent is a floor, 

not a ceiling. We should direct the Secretary of the Treasury to demand warrants that fully compensate the taxpayer for the risks being taken in any 

particular deal. 

Then we turn to the issue of executive compensation and perks. These are 

very important to taxpayers and are 

important in deterring those companies that don’t need a bailout from 

coming to Washington in their private 

jets, hats in hand. 

Now, the bill, as interpreted by the 

Bush administration, has allowed multimillion dollar salaries to continue to 

be paid to the very executives who 

drove their companies into the ditch, 

and the Bush administration has chosen to impose no limits on perks. In 

particular, the Bush administration 

has ignored section 111(b) of the EESA, 

also known as the TARP bill. 

That section states: Where the Secretary determines that the purposes of 

the act are best met through direct 

purchases of troubled assets, the Secretary shall require that the financial 

institution meet appropriate standards 

for executive compensation and corporate governance. 

Virtually all of the $350 billion that 

the Secretary of the Treasury has expended has been pursuant to his determination that we could best be served 

through direct purchases of troubled 

assets. He has not done an auction, 

which was the main part of the bill he 

was trying to sell to us. Instead, he has 

simply made direct purchases of assets 

from companies, negotiated one at a 

time. In those circumstances, the law 

requires that he shall require that the 

financial institution meet appropriate 

standards for executive compensation 

and corporate governance. 

What has Secretary Paulson done? 

He has allowed multimillion dollar 

bonuses to be paid to the executives of 

AIG. He has allowed million-dollar-amonth salaries to continue to be paid 

to executives of bailed-out Wall Street 

firms. He has allowed all of those entities to continue to operate fleets of private jets. Despite getting our money, 

Goldman Sachs spent almost a quarter 

million dollars a year to provide a limo 

for one executive. This does not constitute appropriate standards for executive compensation and corporate governance, nor should Congress simply 

punt to the executive branch what 

those appropriate standards should be. 

Instead, we should provide by law 

that, if a company gets a Federal bailout, the firm must limit its total compensation package to any executive to 

no more than $1 million per year for as 

long as the firm is holding our money. 

The limits should apply to the whole 

package of compensation—salaries, bonuses, pension plan contributions, and 

stock options. In particular, a huge 

grant of stock options to an executive 

at this time could be a bonanza—and 

an unjustified one—because right now 

all the stock prices of Wall Street 

firms are at depressed levels, and an 

option given to an executive to buy 

shares of stock for $1 or $2 a share 

could turn out to be more valuable 

than a ton of winning lottery tickets. 

To the extent any existing contract 

provides for executive compensation in 

excess of that which is allowed under 

statute, I suggest that the bill provide 

that that contract is void as against 

public policy. 

Now, let us turn to perks. We should 

limit luxury perks like corporate jets 

and chauffeured limousines. We should 

prevent these while any firm is holding 

taxpayers’ money. I’ll point out there 

are firms on Wall Street that got 

money from Paulson that said, ‘‘Hey, 

we signed up for the money. We never 

knew you were going to get tough with 

us.’’ Fine. You don’t like the new 

rules? Give us back our money; but if 

you retain taxpayer money, then you 

should not, as Goldman Sachs has 

done, be paying a quarter million dollars in a year for a chauffeured limousine service for one executive. If the 

firm’s executives don’t want to take off 

their belts and their shoes and go 

through airport security like the public does, then that firm should not receive and should not retain a bailout, 

and it probably doesn’t need one. 

For as long as those bailout funds are 

outstanding, we should prohibit firms 

from owning, leasing or chartering luxury jets or from maintaining a fleet of 

chauffeured limousines. We should provide exceptions for chartering planes to 

travel to remote areas, areas remote 

from scheduled air service, and we 

should allow some sort of driver and 

auto to be provided to those executives 

who face severe physical challenges. 

We may also want to provide limits 

on how much the company reimburses 

its executives per night for any hotel 


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January 7, 2009 CONGRESSIONAL RECORD — HOUSE H63 

room—a maximum amount of $500 

comes to mind—or per meal for any 

meal. Perhaps it should be $100 per 

meal. I hate to get down to this level of 

specificity, but Wall Street has proven 

that they will squander the money taxpayers provide their firms on lavish 

parties and fancy travel if we are not 

specific. 

It is possible that the auto bailout 

bill that passed this House will be used 

as a model for limiting executive compensation and perks. If that’s the case, 

we had better strengthen it first. We 

had better make clear that the limits 

on bonuses apply not just to cash bonuses but also to grants of stock options. We should limit the total compensation to $1 million a year, and we 

should limit the use not just of leased 

or of purchased luxury aircraft but also 

of chartered luxury aircraft. Finally, 

we should have appropriate limits on 

limousines. 

Let me point out that some of my 

colleagues have noticed that I was 

tough on the auto executives who used 

their private jets to come to us the 

first time. 

One of those companies has told me 

very explicitly: ‘‘Sherman, the law 

may say that we can’t own the jets; the 

law may say we can’t lease the jets, 

but the law, as passed by the House, 

says we can still charter the jets, and 

our CEO is never going to fly commercial.’’ 

That’s fine unless that firm receives 

bailout money. Once it does, we have 

to limit it. We can’t play a shell game 

with the American people. Oh, we’ll 

limit the luxury travel, and then just 

have the company charter the jet instead of lease the jet. That would be a 

fraud on the American people. 

There is one other important improvement that we need to make to the 

TARP bill. You see, after that bill 

passed, the Treasury adopted, as I mentioned before, a plan to buy preferred 

stock, in particular, of financial institutions. The next administration will 

probably use a good chunk of the 

money to go back to the original plan, 

which was to buy bad bonds—toxic assets—from the financial institutions. 

Then we have to be worried. If we’re 

buying bad bonds, at least we should 

buy bad bonds owned by American investors. It is not the purpose of this 

bill to bail out banks in London and in 

Riyadh and in Shanghai. 

I want to make a technical distinction. I have no objection to our treating as American companies such firms 

as Hancock Insurance and Fireman’s 

Fund that happen to be owned by a foreign parent. We should look at what 

company is on American soil, and we 

should provide appropriate bailouts to 

the companies on American soil, but 

what we should not do is start bailing 

out banks in Shanghai, London and Riyadh. 

Under the bill as we passed it from 

this House, the Bank of China can sell 

a portfolio of toxic assets to any U.S.- 

headquartered entity whether it owns 

that entity or not. It could be a small 

branch that it owns in my State of 

California or it could be some big bank 

on Wall Street that it does not own, 

but the Bank of China can sell a portfolio of bad bonds to a U.S.- 

headquartered entity on Monday, and 

under the bill we passed, that entity 

can sell those same bonds to the Treasury on Tuesday. I call this the China 

two-step. It is a mechanism by which 

we will end up bailing out the bad business investments, not of U.S.-based 

companies, but bad bonds which are 

held in safes in Shanghai and in London. 

Our new legislation should provide 

that the Treasury can only buy assets—bad bonds, mortgages—proven to 

be held by a U.S. entity—whether it’s a 

foreign-owned entity or not, an on-theground, in-the-United States entity— 

on September 20, 2008. 

b 1430 

We should only be buying the bad 

bonds that were in safes located in 

America on September 20, which is the 

day that Paulson went public with the 

need for a bailout bill. 

Now, I look forward not only to reforming the TARP bill but also using 

that reform as an opportunity to pass 

other legislation within the jurisdiction of the Financial Services Committee that can help deal with this economic crisis. And I want to point out, 

first, things that we can do that won’t 

cost the treasury a penny, because before we start spending trillions of dollars, we should say, ‘‘What can we do to 

get out of this mess that doesn’t cost 

us anything?’’ 

There are a couple of opportunities. 

First, we can increase the amount of 

business lending that can be made by 

credit unions. Right now, we limit 

credit unions severely as to how much 

business lending they can do. We could, 

for the duration of this crisis, allow 

those credit unions to make those business loans to small business: $100,000 

loans, $150,000 loans. I’m only talking 

here about smaller loans to small businesses that need them. We need to 

allow businesses in all of our districts 

to get that $100,000 loan that they need 

to expand or even to stay in business. 

And it is just folly for us to take one of 

the healthy groups of financial institutions in this country namely, the credit unions, and tell them they can’t 

make the $100,000 loan that is desperately needed by the small businesses in our respective districts. 

Second, we need to increase the conforming loan limit. The conforming 

loan limit is the size of the loan that 

can be purchased by Fannie Mae and 

Freddie Mac. Those are basically the 

only loans that are being made today. 

And the cost of housing differs tremendously from one region of the country 

to another, even in these tough times 

when of course in most regions prices 

have gone down. 

Last year, we raised the conforming 

loan limit to $729,750 for high cost 

areas, but we allowed that increase to 

expire effective on the first day of this 

year. We need to restore that at 730, 

perhaps raise it to 750. Now, this will 

not cause the Federal Government to 

lose a penny because Fannie and 

Freddie actually make a profit on the 

larger loans. They suffer losses or have 

suffered losses on the smaller loans. 

One way we can help replenish the 

money that Fannie and Freddie have 

lost is to allow them in high cost areas 

to do loans at the $750,000 level. That 

can be so critical for some of our big 

cities where declines in house prices 

have so badly affected local economies. 

Now let me turn my attention to the 

stimulus bill, the bill that will basically be crafted by the Appropriations 

and Ways and Means Committees. 

First, I want to approach the general 

principles that should be covered under 

that bill, and then I want to comment 

on specific ideas that are being put forward in light of those principles. 

Mr. Speaker, this country faces the 

specter of depression. A deflationary 

cycle threatens a long period of economic contraction. We need an enormous immediate economic stimulus. 

But unless that stimulus is well designed, it may not pass Congress. Unless it is well designed, it may not 

achieve its objectives. And unless it is 

well designed, it may sow the seeds of 

a future disastrous decline in the value 

of the dollar. 

So we have to make sure that the 

stimulus bill is big and fast but also 

tough, temporary, and self-reversing. 

What do I mean by ‘‘tough’’? As I 

have said, Federal dollars should be extended to private interests only on the 

toughest terms. And I have indicated 

there are three reasons for that. 

First, we’ve got to discourage everyone from seeking a bailout or from believing that they’re suckers for not 

seeking a bailout. 

Second, we need to increase public 

support for what will be a highly contentious and difficult-to-pass stimulus 

bill. It will be much easier for Members 

to vote for such a bill if it provides the 

toughest terms to those who are receiving extraordinary Federal largess. 

And finally, as I pointed out, by getting warrants, by getting other securities that give us a share of the upside, 

we will be in a position to decrease the 

increase in the deficit occasioned by 

the stimulus package. 

Now let’s talk about why the bill 

must contain provisions so that the 

stimulus is temporary and reversible. 

Self-reversing, in fact. 

Keynesian economics offers a simple 

prescription for the difficult times 

we’re facing now. That is to say, easy 

money now and fiscal and monetary 

austerity after the economy improves. 

How in good conscience can we vote 

for a massive economic stimulus now if 

we believe that it is unlikely that Congress will adopt austerity later? We in 

Congress love handing out money. We 

know that. We love tax cuts, and tax 

rebates, and tax holidays, and tax fiestas, and benefit expansions, and subsidies, and bailouts, and infrastructure 


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H64 CONGRESSIONAL RECORD — HOUSE January 7, 2009 

projects, and aid to States, and aid to 

cities and Rite Aid, Kool-Aid. We like 

spending money. 

Can we count on future Congresses to 

discontinue and then reverse the fiscal 

expansion that is necessary today? 

What I fear is going to happen is that 

the advocates of fiscal responsibility— 

and I count myself among them—may 

prevent Congress from giving us the 

full level of economic stimulus that we 

need now. I fear that the stimulus will 

not be as big and fast as we need now. 

And simultaneously, I fear that the advocates of tax cuts and the advocates 

of free spending will prevent us from 

turning off the spigot later. 

To avoid this outcome, the stimulus 

package should be both temporary and 

self-reversing. The same statute which 

provides a huge amount of stimulus 

should also provide particular identified tax increases and expenditure cuts 

that will go into effect automatically 

in the year 2013. The statute could and 

should provide that those automatic 

provisions would be delayed if we failed 

to achieve 3 percent economic growth 

in the year 2012. 

Now, of course I can’t know today 

what is the best budgetary policy for 

this country in 2013. We would have to 

fine tune or change anything that we 

write today as 2013 approaches. But we 

need to give the upper hand to those 

who would advocate fiscal responsibility after economic growth has resumed. 

If austerity in 2013 is mandated by a 

statute that goes into effect, then the 

advocates of fiscal responsibility will 

have that upper hand and can negotiate with our colleagues to make sure 

that we get the kind of austerity that 

should follow the fiscal expansion that 

we need now. Only if an economic stimulus proposal is tough, temporary, and 

self-reversing can we generate the political will necessary to adopt a proposal that’s big enough and fast 

enough. Only if stimulus measures are 

temporary and self-reversing can we 

make sure that the actions we take 

this month do not eventually lead to 

inflation, higher interest rates, a declining dollar, and an enormous and 

permanent increase in the Federal 

debt. 

So these are the principles that I 

think should guide us with regard to 

particular elements of the stimulus 

bill. 

Now let us look at particular proposals. Are they efficient? Do they get 

money into circulation quickly? Does 

every dollar we spend or forego get into 

the economy and get in quickly? 

Second, is the money spent for a good 

purpose? 

Third, does the money stay in the 

United States, or are we going to be 

spending money at the Federal level 

that goes to simply finance our trade 

deficit? 

And finally, are the provisions temporary and self-reversing? 

First, let us talk about aid to States. 

This is, I think, the most important 

element of the program because what 

could be worse for an economy facing 

contraction than to see our police officers and teachers being laid off by 

State and local governments just when 

we need to keep people employed. 

If we provide aid to States, what 

about the efficiency? I think every 

State government is going to spend 

that money effectively. Those States 

that don’t need it may choose to save 

it for the future, but there are very few 

of those. Will the money be put to good 

use? Yes, to keep teachers and firefighters and police officers on the payroll and all on the job. Will the money 

stay in the United States? One hundred 

percent of it stays in the United 

States. 

And, of course, this would be temporary. If we wanted, we could even 

make it self-reversing. Most States are 

not allowed to borrow money from the 

Federal Government by their own constitutions, but what we could do is 

change the reimbursement formulas so 

that we take a bigger share of the Medicaid budget than we do now and let 

the States save money on that with the 

understanding that come 2013, not only 

does that formula go back to where it 

was, but it may even swing in the other 

direction and be adverse to the States. 

They could plan for this. This would 

be a way to make the proposal of State 

aid even self-reversing. But if it’s not 

self-reversing, it will be temporary. It 

will be efficient. It will be a good use of 

money, and the dollars will stay in the 

United States. 

Second is the possibility of tax rebates to consumers. This is money that 

will be well spent by America’s families who need it. But we cannot be sure 

that they will spend it. It may be 

saved, and we have to expect that of 

the portion of it that will be spent, 

much of it will be spent on foreignmade goods. So it may be important to 

provide these rebates to consumers in 

our society. It will help keep the retail 

economy going, keep our shopping centers from going bankrupt, et cetera. 

But let us remember that a chunk of 

that money is going to go overseas. 

A third element is business tax 

breaks, and here we have to draw a distinction between those business tax 

breaks, which we in the tax world call 

‘‘timing differences,’’ and those that 

are permanent tax reductions. 

What are the timing differences? 

Timing difference is when you give 

somebody a deduction today that they 

would otherwise get tomorrow anyway. 

You have simply changed the year in 

which they get the tax reduction. 

There are two proposals on the table 

from the Obama transition team that 

fit this bill. One of those is changing 

the rules with regard to investments 

up to, I believe it’s a quarter million 

dollars, to let smaller businesses write 

this money off in the year in which 

they spend the money. In the absence 

of a special provision, they would have 

to capitalize that money and write it 

off as the asset they purchased is used 

up, as the machinery wears out. 

Well, we want to encourage businesses to invest now, and ultimately it 

costs us little or nothing. Yes, we give 

them the deduction right now this 

year, otherwise they would take it over 

a period usually of 5 years. Why not 

give them the deduction now? The ultimate increase in the deficit over 5 

years is very small. 

b 1445 

Now, it is true that there’s a time 

value of money. Not getting tax dollars 

today and getting them instead several 

years from now, that used to be 

thought of as a cost to the Treasury because you have to pay interest on the 

money the Federal Government borrows. But today the Federal Government is borrowing money for amazingly low interest rates, some at the 

rate of zero, and so the fact that we 

will get the tax dollars collected from 

businesses 2 or 3 years from right now, 

rather than immediately, scarcely increases the Federal deficit. 

Another issue is net operating loss 

carryforwards and carrybacks. These 

are companies that made money during 

the last 5 years. Now they’re losing 

money in 2008 or they’re going to lose 

money in 2009. Current tax law allows 

them to write off those losses chiefly 

against money they make in 2011, 2012, 

future years. We should allow these 

companies to carry it back, to use 

these net operating loss deductions 

now to offset the taxes they paid in 

prior years. 

First, I regard this as fair. Any accounting theorist will tell you that the 

use of the 1-year accounting period is 

arbitrary, that companies make and 

lose money in cycles. Business cycles 

often last many years, and so you cannot say that it is anything but artificial to say, well, you made money in 

2007, you lost money in 2008. No, you 

made and lost money over a period of 

years that we have artificially divided 

into 12-month periods. So saying that 

you have to pay money on the taxes 

you made in 2007 but cannot get an immediate refund of those taxes when you 

discover that really over the 2-year period you’ve lost money is not consistent with good accounting theory. 

We should allow net operating loss 

carryback. 

The other thing is these net operating loss deductions. They’re going to 

be taken at some point. We might as 

well let them be taken now, and the ultimate increase in the deficit is very 

small. 

So those are two provisions that I 

think will encourage business and will 

provide a lot more money in expenditures today than an ultimate increase 

in the deficit over a 5-year period. 

So I look forward to working with 

my colleagues on economic policy. I 

will have more details of what I’ve 

talked about on the Web page, 

bradsherman.house.gov. This is the beginning of a dialogue on how to deal 

with the greatest economic crisis that 

we have faced in the lifetimes of all but 

the oldest Members of this body. 


wwoods2 on PRODPC68 with HOUSE
January 7, 2009 CONGRESSIONAL RECORD — HOUSE H65 

FOREIGN POLICY

At this point, Mr. Chairman, I’d like 

to focus on foreign policy and particularly the Middle East. Again, I would 

point out that if there are colleagues 

that would like me to yield them a few 

minutes and they happen to be on the 

floor, they need only get my attention. 

Now, I want to commend the Bush 

administration for its support of Israel 

during this difficult period. Now, the 

press, as is often the case, is beating up 

Israel due to its lack of understanding 

of what is happening and how to interpret it. 

First, let us remember that over the 

last several years Hamas has sent nearly 7,000 rockets into Israel. That’s 7,000 

times they have attempted murder. 

But the press would have you believe 

that those attempts at murder don’t 

count because most of them were unsuccessful. This is absurd. The malice 

is demonstrated by the attempted murder, and I use the term ‘‘murder’’ explicitly here because every one of those 

rockets was fired with only one intention: kill Israeli civilians. Not a single 

one of those rockets was targeted at 

anything military. The fact that they 

haven’t killed 7,000 Israelis does not reflect well on their morality. It may reflect poorly on their aim. 

Second, and this is under-covered by 

the press, the United Nations has stated that roughly three-quarters of the 

casualties in Gaza are of terroristsmilitary, gun-toting, Hamas terrorists. 

This is a true tribute to the tactics 

used by Israel because Israel has done 

everything possible to avoid civilian 

casualties. Hamas has done everything 

possible to increase civilian casualties. 

Again and again, they fire rockets from 

the middle of schools, from the middle 

of hospitals, from the middle of residential neighborhoods. 

I mean, these people live very close 

to each other. Israel actually has the 

Gaza phonebook. They will call a house 

and say, We know military supplies are 

being stored there, we’re going to hit 

this house, you’ve got 10, 20 minutes to 

leave. And what happens? Hamas forces 

civilians up to the rooftops. 

Perhaps one of the best-known examples is the highest level Hamas individual to be killed by Israel. At his 

home he stored rockets and Israel 

knew it. He announced publicly that he 

wanted to be a martyr and that he, 

himself, would be at his home. And 

Israel called that home and said we 

want to avoid civilian casualties. We 

have to hit that home because we know 

that rockets are being stored there, 

you have time to leave. What did this 

Hamas leader do? He forced and 

brought together his four wives and 

their many children and insisted that 

he be allowed to die as a martyr and 

that as many of his family members 

would die as possible in order to increase civilian casualties. 

Now, it is well-known that Israel is 

allowing trucks of supplies to get into 

Gaza. This is usually known by press 

critics who say Israel didn’t allow a resupply truck in at this particular hour; 

they made the truck wait a couple of 

hours. Let us compare this to the wars 

we are most familiar with: World War I 

and World War II. 

During each of those wars, Britain 

used its entire navy to cut off every 

German civilian from food imports and 

any other kind of import. And Germany deployed its submarines with the 

sole effort of depriving the British of 

the food imports they needed from 

chiefly the New World. 

So, in the wars we’re most familiar 

with, both the good and the bad side 

did everything possible to stop civilian 

supplies from getting into Germany or 

Britain. Compare that to an Israel that 

protects the trucks as they go in. 

With that, I’d like to yield to the 

gentleman from Georgia (Mr. BROUN). 

Mr. BROUN of Georgia. I thank the 

gentleman for yielding. I appreciate 

my Democratic colleague for bringing 

this very important issue to the forefront, and I support your effort to do 

so, and I trust that we across the aisle 

can continue to support Israel. 

In the Torah, in the Old Testament of 

the Bible, we read: Blessed is the Nation that blesses Israel, and cursed is 

the Nation that curses Israel. We as a 

Nation have been extremely blessed by 

our creator, by God, and I believe a big 

part of that, a huge part of that is because we have blessed Israel and supported Israel. These people are under 

attack by terrorists who consider Jewish people dogs, less than human, and 

we need to support Israel. 

I highly congratulate my Democratic 

colleague for bringing this forward, and 

I encourage our colleagues to continue 

to support Israel, to continue to do 

what we can to make sure that the 

Israeli citizens remain safe against 

these heinous attacks by Hamas, by 

Hezbollah, by the Iranian people who 

are funding both organizations. So we 

need to absolutely continue to support 

Israel so that God will continue to support America, and I congratulate my 

colleague for bringing this forward, and 

I look forward to working with you to 

continue to support Israel. 

Thank you. 

Mr. SHERMAN. I look forward to 

working with the gentleman from 

Georgia and thank him for his remarks. 

Any discussion of the morality of war 

sometimes gets off on what I think is a 

sidelight. People always want to criticize this or that sergeant, this or that 

gunner; oh, you shouldn’t have responded this way to rocks being 

thrown; oh, your attempt to return fire 

to a Hamas rocket site was off by 10 

yards or 20 yards in the direction of a 

civilian location. 

We have to remember, the moral responsibility for war and for the deaths 

of war cannot be placed at the feet of 

this or that sergeant making this or 

that decision under life-threatening 

conditions. The moral responsibility 

for war and for its casualties must be 

placed on politicians who seek extreme 

and unjust objectives through violent 

means. 

Here’s a case where Hamas has 

earned its designation as a terrorist organization. Not only does it use terrorist means, but what are its objectives? They are stated very clearly. 

They are for the death or expulsion of 

every Jew from the Middle East. They 

refuse any change in that policy. So 

whether it is genocide or ethnic cleansing or more likely a combination of the 

two, these are the objectives of Hamas, 

being pursued by violent means. It is 

obviously the fault of the politicians of 

Hamas who seek these objectives that 

must be held responsible for the resulting carnage. 

We need a sustainable, permanent 

cease-fire, not a 2-day resupply truce to 

allow Hamas to bring in more rockets. 

Now, I think it’s clear that this is 

not just a conflict between Israel and 

Hamas. It is a conflict between the 

Government of Iran and the people of 

the United States. The fighting in Gaza 

has demonstrated again that the ultimate adversary of the United States 

and its allies in the Middle East is the 

Government of Iran. Hamas is a terrorist organization seeking the destruction of Israel in favor of an Islamic Palestinian State, but it is also 

an Iranian proxy. As such, it is part of 

a regional war waged by the Iranian regime against the United States and its 

allies. 

Many Hamas weapons are made in 

Iran, and many top Hamas military 

leaders and the experts who launch the 

missiles into Israel were trained in 

Iran. Iran also provides the group with 

significant funding. It is unlikely that 

Hamas would have been able to achieve 

its status as the premier Palestinian 

terrorist organization and thus provoke this crisis without Iranian backing. 

Iran-backed Hamas, like Iran-backed 

Hezbollah, shoots rockets at Israeli civilians from deep inside their own 

densely populated civilian population, 

knowing that when Israel acts to defend itself innocent Palestinians will 

be among the victims. 

Through Hamas, Hezbollah and its 

operatives in Iraq, Iran and its government are able to stir up crises in the 

Middle East, thus injuring American 

prestige while helping to achieve that 

government’s own aims. 

We know that Iran is working hard 

toward the possession of a nuclear 

bomb. This would allow Iran to act 

with impunity in the future. A nuclear 

Iran would go from provoking this crisis to that crisis, and we would have to 

go face-to-face with a nuclear power, 

each time hoping, hoping for the same 

results we saw in the Cuban missile crisis—that is to say, going eyeball-toeyeball with a hostile nuclear power 

hoping we always have the same result, 

namely, some peaceful resolution. 

b (1500) 

It only takes one crisis with a nuclear power that goes in the wrong direction to destroy an entire city or an 

entire country. 


wwoods2 on PRODPC68 with HOUSE
H66 CONGRESSIONAL RECORD — HOUSE January 7, 2009 

Furthermore, we should recognize 

that if the regime in Tehran ever finds 

itself on the verge of collapse—and 

many of us pray for that day—its leaders may decide to go out with a bang. 

Preventing Iranian nuclear possession is critical to world peace, and we 

can still succeed in accomplishing that 

goal, but we have to act quickly. The 

good news is we have used only 1 percent of the tools that are available to 

us, and therefore we can do a lot more. 

The bad news is we’ve used only about 

1 percent of the tools available to us. 

We have demonstrated a lack of political will to use the methods that we 

have to use to put pressure on the Iranian regime. 

Now, President-elect Obama has a 

strong record of working to put pressure on the Iranian regime. He voted 

for the Lautenberg amendment, which 

would have prevented U.S. oil companies from doing business with Iran 

through their foreign subsidiaries. And 

he authored a bill that would have encouraged divestment from firms—chiefly oil companies—doing business with 

Iran. 

He will have the ability, when he 

takes office, to go a long way toward 

increasing the price the Iranian Government pays for its stance on the nuclear issue and its support for terrorism. First, he can stop U.S. oil companies from using their overseas subsidiaries from doing business with Iran. 

We should also do that by legislation. 

The administration can start enforcing the Iran Sanctions Act. We can demand that the World Bank stop dispersing funds to Iran in the form of 

concessionary loans which have not 

been effectively opposed by the current 

administration. We can deny nuclear 

cooperation agreements to countries 

that provide technologies to Iran. We 

can deny insurance to ships that carry 

cargo to Iran. And we can put economic pressure on American foreign 

companies seeking to build liquefied 

natural gas plants in Iran and those 

that sell refined petroleum—chiefly 

gasoline—to Iran. 

Now, while Iran is oil rich, it needs 

to import nearly half its gasoline because it lacks refinery capacity. I’m 

here to bring to the House’s attention 

one recent success. The Indian press is 

reporting that as a result of pressure 

that was initiated in the Congress, a 

major Indian petroleum refinery is 

halting its business dealings with Iran. 

I want to thank the several of my colleagues who joined with me in sending 

a letter to the U.S. Import-Export 

Bank to demand that EX-IM not provide loans to this particular Indian refinery as long as the Indian refinery 

was supporting Iran and providing it 

with the gasoline it needs. 

I look forward to being able to convince Iranian elites that they face 

other economic and diplomatic isolation if they continue their nuclear program and continue their support for 

terror, and there are many other ways 

that we can achieve that objective. I 

invite my colleagues again to see more 

details at bradsherman.house.gov. 

f 

SANCTITY OF HUMAN LIFE ACT 

The SPEAKER pro tempore. Under a 

previous order of the House, the gentleman from Georgia (Mr. BROUN) is 

recognized for 5 minutes. 

Mr. BROUN of Georgia. Mr. Speaker, 

I believe that there is no greater moral 

issue that America faces that is more 

important than the killing of 4,000 babies every day through abortion. God 

cannot and will not continue to bless 

America while we’re killing those innocent unborn children. 

As we ring in the new year and begin 

the 111th Congress, the need to protect 

the unborn remains front and center in 

the national political debate. Each 

year, in keeping with my promise to 

my constituents and many around the 

country that the first bill that I will 

introduce provides constitutional protections to unborn children, today I’m 

honored to introduce the Sanctity of 

Human Life Act, H.R. 227, that defines 

life beginning at fertilization with the 

creation of a human zygote, a onecelled human being. 

As a physician, I understand the 

medical and scientific truths that life 

begins at fertilization. I also understand that the entire abortion debate 

rests on the decision of when life begins. That’s why my bill, among other 

things, says unequivocally that at the 

moment of fertilization, when this 

spermatozoa enters the cell wall of the 

oocyte and forms that one-celled 

human being, the zygote, that a human 

life begins and must be protected under 

law. 

As James Madison wrote in Federalist 39, the form of our government 

must be ‘‘reconcilable with the fundamental principles of the revolution,’’ 

the American Revolution. First among 

those principles is the right to life. If a 

nation will not protect the most innocent of human beings, who will we protect? Concerned citizens and lawmakers must keep this fundamental 

principle in mind as we work fervently 

to protect the rights of unborn children. 

When I was a full-time doctor prior 

to coming to Congress, I served on the 

board of directors for a crisis pregnancy center in inner-city Atlanta, 

Georgia. We were fighting to save babies of underprivileged moms, many 

black moms in Atlanta. From a statistical standpoint, more black babies are 

being killed proportionately through 

abortion than white babies, and we 

were working to save those children. 

I’m using the tools that my constituents have blessed me with to protect 

life and give constitutional protections 

to the innocent unborn. My bill, the 

Sanctity of Human Life Act, gives Republicans and Democrats alike who 

cherish life an opportunity to protect 

and defend the innocent and most defenseless among us. 

We need to pass the Sanctity of 

Human Life Act. I encourage my colleagues to get on this bill, support this 

bill, bring it to the floor for a vote, and 

stop killing these unborn children so 

God will continue to bless America. 

f 

ELECTING MEMBERS TO CERTAIN 

STANDING COMMITTEES OF THE 

HOUSE OF REPRESENTATIVES 

Mr. LARSON of Connecticut. Mr. 

Speaker, by direction of the Democratic Caucus, I offer a privileged resolution and ask for its immediate consideration. 

The Clerk read the resolution, as follows: 

H. RES. 24 

Resolved, That the following named Members be and are hereby elected to the following standing committees of the House of 

Representatives: 

(1) COMMITTEE ON APPROPRIATIONS.—Mr. 

Murtha, Mr. Dicks, Mr. Mollohan, Ms. Kaptur, Mr. Visclosky, Mrs. Lowey, Mr. Serrano, 

Ms. DeLauro, Mr. Moran of Virginia, Mr. 

Olver, Mr. Pastor, Mr. Price of North Carolina, Mr. Edwards, Mr. Kennedy of Rhode Island, Mr. Hinchey, Ms. Roybal-Allard, Mr. 

Farr, Mr. Jackson of Illinois, Ms. Kilpatrick 

of Michigan, Mr. Boyd of Florida, Mr. 

Fattah, Mr. Rothman, Mr. Bishop of Georgia, 

Mr. Berry, Ms. Lee, Mr. Schiff, Mr. Honda, 

Ms. McCollum of Minnesota, Mr. Israel, Mr. 

Ryan of Ohio, Mr. Ruppersberger, Mr. Chandler, Ms. Wasserman Schultz, Mr. Rodriguez, 

Mr. Lincoln Davis of Tennessee, Mr. Salazar. 

(2) COMMITTEE ON ARMED SERVICES.—Mr. 

Spratt, Mr. Ortiz, Mr. Taylor, Mr. Abercrombie, Mr. Reyes, Mr. Snyder, Mr. Smith 

of Washington, Ms. Loretta Sanchez of California, Mr. McIntyre, Mrs. Tauscher, Mr. 

Brady of Pennsylvania, Mr. Andrews, Mrs. 

Davis of California, Mr. Langevin, Mr. 

Larsen of Washington, Mr. Cooper, Mr. Marshall, Ms. Bordallo, Mr. Boren, Mr. Ellsworth, Mr. Patrick Murphy of Pennsylvania, 

Mr. Johnson of Georgia, Ms. Shea-Porter, 

Mr. Courtney, Mr. Loebsack, Mrs. Gillibrand, 

Mr. Sestak, Ms. Giffords, Ms. Tsongas, Mr. 

Nye, Ms. Pingree of Maine, Mr. Kissell, Mr. 

Heinrich, Mr. Kravotil, Mr. Massa, Mr. 

Bright. 

(3) COMMITTEE ON ENERGY AND COMMERCE.— 

Mr. Dingell, Mr. Markey, Mr. Boucher, Mr. 

Pallone, Mr. Gordon of Tennessee, Mr. Rush, 

Ms. Eshoo, Mr. Stupak, Mr. Engel, Mr. Gene 

Green of Texas, Ms. DeGette, Mrs. Capps, Mr. 

Doyle, Ms. Harman, Ms. Schakowsky, Mr. 

Gonzalez, Mr. Inslee, Ms. Baldwin, Mr. Ross, 

Mr. Weiner, Mr. Matheson, Mr. Butterfield, 

Mr. Melancon, Mr. Barrow, Mr. Hill, Ms. 

Matsui, Mrs. Christensen, Ms. Castor, Mr. 

Sarbanes, Mr. Murphy of Connecticut, Mr. 

Space, Mr. McNerney, Ms. Sutton, Mr. 

Braley of Iowa, Mr. Welch. 

(4) COMMITTEE ON FINANCIAL SERVICES.—Mr. 

Kanjorski, Ms. Waters, Mrs. Maloney, Mr. 

Gutierrez, Ms. Velazquez, Mr. Watt, Mr. Ackerman, Mr. Sherman, Mr. Meeks of New 

York, Mr. Moore of Kansas, Mr. Capuano, 

Mr. Hinojosa, Mr. Clay, Mrs. McCarthy of 

New York, Mr. Baca, Mr. Lynch, Mr. Miller 

of North Carolina, Mr. Scott of Georgia, Mr. 

Al Green of Texas, Mr. Cleaver, Ms. Bean, 

Mr. Moore of Kansas, Mr. Hodes, Mr. Ellison, 

Mr. Klein of Florida, Mr. Wilson of Ohio, Mr. 

Perlmutter, Mr. Donnelly of Indiana, Mr. 

Foster, Mr. Carson of Indiana, Ms. Speier, 

Mr. Childers, Mr. Minnick, Mr. Adler of New 

Jersey, Ms. Kilroy, Mr. Driehaus, Ms. 

Kosmas, Mr. Grayson, Mr. Himes, Mr. Peters, Mr. Maffei. 

(5) COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE.—Mr. Rahall, Mr. DeFazio, 

Mr. Costello, Ms. Norton, Mr. Nadler of New 


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