Thank you for contacting me regarding the "Emergency Economic Stabilization Act of 2008." I appreciate hearing from you.
Much of our economic crisis today is rooted in misguided policies of the past. Permitting home mortgages with nothing down was a disaster waiting to happen when home prices fell. Unfortunately, all the bad mortgages and the resulting credit crisis have dragged down our economy and threatened the financial well-being of all Americans.
I have heard from many constituents of the 21st District regarding this legislation. How best to address our economic crisis has been the source of much debate and frustration.
The "Emergency Economic Stabilization Act" passed the House by a vote of 263-171 and was signed into law by the President on October 3, 2008. In supporting this legislation, my first priority was to protect American taxpayers. It is important to make sure that those who have acted responsibly are not punished and that their financial future remains stable and secure. Improvements were made to the plan to address my concerns. Measures were included to ensure Wall Street pays its share and taxpayers are protected.
We are facing the economic equivalent of a cattle stampede. To stop a stampede, you have to act quickly and decisively and get ahead of the herd to turn it. This plan, while not perfect, does that.
The legislation includes more government oversight, restricts executive pay, protects taxpayers by prohibiting the unjust enrichment of participating companies, and promotes transparency by requiring full disclosure of the transactions conducted by the Treasury Department.
The amended legislation also includes a one-year patch to the Alternative Minimum Tax, without which 21 million middle class families would have seen a total of $62 billion in tax increases. The bill includes tax credits for research and development, to encourage the installation of wind, solar and biomass power plants, and for hybrid plug-in vehicles. More importantly for Texas, a state which has no income tax, this legislation will continue to allow residents to deduct state and local sales taxes from their federal income tax returns.
If companies big and small cannot access funds they need to operate and pay employees, this will adversely impact the entire economy and punish hard-working Americans. If credit to buy homes, cars and other purchases dries up, home prices will fall even further and loans will become even harder to obtain.
This legislation protects American jobs, the financial security of families, and the economy of our nation. Half of all households own stocks either directly or indirectly through 401(k) accounts, IRAs, and pension plans. The "Emergency Economic Stabilization Act" will stabilize the financial markets and restore investor confidence.
The money in the compromise plan will be used to purchase the mortgage-related assets at the center of the problem. When the financial markets stabilize, many of those assets will regain their value and will be sold by the federal government to recover a substantial portion of the cost for taxpayers.
I believe the plan will stabilize the economy, strengthen home values, and prevent a devastating recession. It is designed to be an investment in the future of the American people.
Again, thank you for contacting me regarding this very important issue.
For more information on my work in Congress or to send me an electronic message, feel free to visit the 21st District's website, http://lamarsmith.house.gov.
Sincerely,
Lamar Smith
Member of Congress
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