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Congressman Capuano's
E-UPDATE
An update from the office of U.S. Representative Michael E. Capuano
7th Congressional District of Massachusetts


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March 2, 2015

Homeland Security

Late last year the House passed legislation funding the federal government through the end of the current fiscal year. The Department of Homeland Security however, was funded only through February 27th in order to give the new Congress an opportunity to take action on the President’s Executive Orders on immigration. The House addressed this by advancing legislation to fund DHS through September 30th but prohibiting action to implement the Executive Orders. The Senate rejected this approach, voting simply to fund DHS through the end of the federal fiscal year. Republican House leadership has thus far refused to consider the Senate bill, even though it would pass overwhelmingly.

House Republican leaders instead brought to the floor a short-term continuing resolution lasting through March 19th because the current funding agreement for DHS was set to expire on February 27th. That extension was rejected and the House adjourned for hours while Republican leaders tried to figure out how to keep DHS funded. Ultimately, a one week extension was brought to the floor and it passed overwhelmingly. You will see in the vote chart below that a fairly large percentage of Republicans refused to support even this modest extension. I voted YES and the entire vote is recorded below:

  YEA NAY PRESENT NOT VOTING
REPUBLICAN

183

55

0

6

DEMOCRAT

174

5

0

9

TOTAL

357

60

0

15

MASSACHUSETTS
DELEGATION

9

0

0

0

Some Thoughts on the Homeland Security Vote

Last week’s difficulties funding the crucial work of DHS is emblematic of the larger struggles facing the House. The stated reason for holding up funding is to prevent money from being spent implementing the President’s Executive Orders on Immigration. I understand and it does not surprise me that many members on the other side of the aisle strongly oppose the President’s actions. In fact, I would welcome a substantive debate on how the country should address immigration reform. However, last week’s debate, in my opinion, wasn’t really about immigration. If it was, why isn’t the House considering separate immigration legislation?

Instead, this vote highlights the deep divide that exists amongst House Republicans — their conservatives and extremists. Too many extremists are willing to bring government to a halt if they don’t get precisely the legislation that they want. But that’s not even the biggest problem — the biggest problem is that the 180 or so Republicans allow the 50 or so extremists within their own party to control the agenda. They allow this even though a compromise with Democrats is possible, as in the Senate on this very issue. This is happening regularly and prevents any real effort toward compromise on any issue. I am not sure what will change this week but I hope that by Friday DHS is fully funded through the end of the fiscal year.

College Savings

On Wednesday the House considered H.R. 529, to Amend the Internal Revenue Code of 1986 to improve 529 plans. This legislation makes some improvements to 529 college savings plans, which were established to help families save for college expenses. The money invested in a 529 account is used for “qualified higher education expenses” such as tuition and books. The investment gains are not taxed. H.R. 529 allows these funds to be used for computers and related expenses. It also allows for the reinvestment of funds without penalty if they are the result of a tuition refund, as long as the funds are reinvested within 60 days. I voted YES. H.R. 529 passed and the entire vote is recorded below:

  YEA NAY PRESENT NOT VOTING
REPUBLICAN

240

1

0

3

DEMOCRAT

161

19

0

8

TOTAL

401

20

0

11

MASSACHUSETTS
DELEGATION

9

0

0

0

Fannie Mae and Freddie Mac

This week I reintroduced H.R. 1036: “Let the GSEs Pay Us Back” Act. This legislation gives Fannie Mae and Freddie Mac, which are Government Sponsored Entities (GSEs), a mechanism to repay the money they owe Treasury. My legislation requires a new agreement to allow payments that Fannie and Freddie make to Treasury to count towards paying down their debt. It will help make taxpayers whole on the money borrowed and will stop homeowners from being treated as piggy banks. I hope this bill will provide incentive to hasten reform of Fannie and Freddie. America needs affordable mortgages for average people and strong, safe agencies to provide them.

This is the technical background: during the 2008 financial crisis, they received $187.5 billion in taxpayer funds to stabilize their operations. Now, fees paid by middle-class homeowners to the GSEs are sent to Treasury to pay down this debt. By the first quarter of 2014, Fannie and Freddie had fully repaid the borrowed funds. By next month, they will have returned over $228 billion to Treasury but NONE of it is counted towards the money owed to taxpayers for the bailout. Unless something changes, average homeowners will continue being forced to make payments toward a debt that never budges.

Originally, the two entities were required to pay quarterly dividends to Treasury on the borrowed funds. In some quarters, Fannie and Freddie didn’t have sufficient funds and had to borrow from Treasury in order to make their dividend payments to Treasury. In 2012, Treasury changed the agreement to fix this. Instead, Fannie and Freddie are now required to return any and all quarterly profits to Treasury. But if all of their profits are turned over to Treasury and counted as dividends, they can’t accumulate enough funds to pay down their debt.

Not counting the GSEs’ payments towards the principal they owe represents outrageous usury on homeowners. If any other creditor refused to reduce the balance of a paying consumer, we would never tolerate it. AIG, GM and others were given the opportunity to pay back their debt from the financial crisis — and the U.S. has profited from these loans. Fannie and Freddie, and by extension homeowners, should have the same chance.

Moreover, the GSEs’ payments should not go towards reducing the national debt. That burden should be borne by all Americans. Homeowners should not be forced to pay more than their fair share. I spoke about this issue during a recent Financial Services Committee hearing, you can watch here:

College Ratings

Rep. Bob Goodlatte and I coauthored an opinion piece on our College Ratings resolution that I would like to share with you: http://thehill.com/opinion/op-ed/233813-college-ratings-plan-not-the-answer

What’s Up Next

This week the House is expected to consider the Passenger Rail Reform and Investment Act as well as legislation to fund the Department of Homeland Security.

Mike


Congressman Mike Capuano
7th District, Massachusetts
Committee on Ethics
Committee on Transportation and Infrastructure
Committee on Financial Services

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