Financial stability means getting back to the basics

This past fall, action was needed to avoid an immediate economic meltdown, and I joined my colleagues in taking action. Now, with the economy stabilized, we should take a breath to evaluate what we faced, why we faced it and how we move forward.

As a member of the Financial Services Committee, I listened as Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson testified about the magnitude of the impending crisis, and I listened as President Bush called for congressional leadership. But, it wasn't just political figures warning of the impending collapse. Businessman Warren Buffet said, "This is really an economic Pearl Harbor." Alan Greenspan described the credit crisis as a "once in a century credit tsunami."

I heard from people back home. Without improvement in the credit markets, many of our businesses that rely on credit to finance their operations were close to stopping payroll or closing altogether. I talked to leaders inside a multi-billion dollar corporation employing thousands. They were at risk of having to initiate massive layoffs because they could not get credit.

One woman called to say she was fearful her small business would have to close because there was no credit available. Farmers were unable to get loans to buy fertilizer. Students were unable to get loans to complete school, and qualified borrowers were unable to get mortgages, further driving down home prices — adding pressure to the housing market.

Even though most Americans had nothing to do with the causes , all Americans faced the potential negative impact. In response, Congress voted to provide significant resources to stabilize our economy. I worked with the administration and congressional leadership to improve the bill — voting against the original version as part of that process. I worked to include conservative principles like suspension of the capital-gains tax, extensions of the Alternative Minimum Tax patch, suspension of mark-to-market, and an increase in FDIC insurance. I also worked to ensure that all funds were not released at once and that we would be provided sufficient oversight information to make informed decisions about the effectiveness of our actions.

Unfortunately, Treasury failed to establish a means of determining and reporting whether financial institutions' activities are generally consistent with the purposes of the legislation, and Treasury is unable to ensure that participating institutions are complying with key program requirements, and it has failed to establish a comprehensive system of internal controls. These failings led the Government Accountability Office to conclude that "there is heightened risk that the interests of the government and taxpayers may not be adequately protected."

Yet Congress, over my objection, voted to release another $350 billion of taxpayers money on TARP's behalf. Unaware of the consequences of our actions or the effectiveness of the initial program, the Democrat leadership in Congress, at the urging of the new president, moved to provide these funds. Additionally, it is unclear whether these funds will continue to focus on the broader credit markets or individual industries will be receiving support, which means our government is now picking winners and losers.

That is why I introduced a measure to put a halt to TARP expansion. My plan would have stopped the final TARP payment and required the Treasury to develop a plan and timetable to pay the money back to American taxpayers. Unfortunately, congressional Democrats used their majority to block my motion.

Our government cannot be an ATM for certain businesses and industries. Besides, the government cannot avert every economic downturn even with all the tools at its disposal. Times like these motivate entrepreneurs to create new and more efficient processes and products, which lead to greater economic growth and job creation. Further government interference may squelch innovation and weaken our economy in the long-term.

I believe it is imperative that we get back to the basics: lower our taxes, cut the burdensome bureaucratic red tape, and move toward energy independence through alternative and domestic energy research. For this to occur, we need strong leadership in Washington and Columbia. Our leaders must realize that they work for the people and are entrusted to use their tax dollars wisely.

The United States has faced economic challenges in the past, and we have overcome each of them. We will do so again.

Gresham Barrett, a Republican, represents South Carolina's 3rd District in the U.S. House of Representatives.