Financial Services and General Government FY2024

Financial Services and General Government FY 2024 Testimony for the Record, March 30, 2023

My testimony addresses increasing the DC Budget to include reimbursables mandated by the Home Rule Act of 1974 and removing later restrictions on billing for presidential motorcades. Next, I will address responding to the imminent financial crisis. Finally, I will offer a subcommittee realignment proposal involving the Commerce, Science and Justice subcommittee and the Legislative Branch Committee.

The District of Columbia was designed to be a creature of Congress. For this reason, funding payments to the District should be transferred to the Legislative Branch Subcommittee. While the advent of Home Rule, eventual statehood for Douglass Commonwealth and the decreasing amount of federal contributions has freed much of D.C.’s Budget (a term I coined as a member of the Stand Up for Democracy in Washington, DC Coalition), there are certain activities that require annual funding that have been ignored since the federal payment was ended and certain activities transferred to the federal government. Until subcommittee realignment, fund the following unmet obligations where this subcommittee has been negligent for almost fifty years:

1. Metropolitan Police activities associated with motorcades, particularly for the President. Indeed, rather unjustly, such funding was disallowed in amendments to the Home Rule Act without allowing the citizens of Washington to vote on such charter amendments. In no state or federal jurisdiction would such unaccountable governance be allowed. While in some states, amendments can occur if passed identically twice with an intervening election, the fact that District voters cannot vote for any voting member, much less all of them, implies that changes to the basic law, in essence the constitution, of the District must be put to a vote to be morally valid. The fact that the current regime of unaccountable governance has not been challenged in federal court does not prevent such a challenge from occurring in the future. Indeed, it is incumbent on the Council of the District of Columbia to place any such amendments on the ballot and to notify Congress of their approval or disapproval of the same. Once this action is taken, the Judiciary can settle the constitutional question.
2. Damage to District Roadways in and around the National Mall caused by the Congressional Steam Plant. This is one case where Congress is exacting tribute from District taxpayers for damage it is continually causing. Visitors to the District likely look at buckling roads and see it as a failure of local governance, which is the farthest thing from the truth.
3. Behavioral health intervention for homeless individuals, including veterans, who camp in the National Capital Service Area and in and around federal agencies, including providing housing first and continuing mental healthcare.
4. Mental healthcare for individuals who have been hospitalized at St. Elizabeth’s Hospital or other District of Columbia facilities, such as the Correctional Treatment Center and the arrest and incarceration of any violent protesters held in the District of Columbia jail awaiting trial for their involvement in the events of January 6, 2021. In the near future, this may include some members of the House and Senate, so funding this line item in this budget would be most apt.

A recession is already upon us as bank failures related to cryptocurrency have started, with housing bonds soon to follow. Anyone who is paying attention knows why crypto is crashing. In the bond market, commercial properties and properties that have been seized in foreclosure have been purchased with private equity and are so heavily leveraged that they cannot be sold until the holding company files for bankruptcy in the next Great Recession. Since the Great Recession and the Pandemic, many now have to rent or own leveraged properties. Absentee landlords have cashed out and left others to bleed us dry. Before the pandemic, Exchange Traded Funds have been all the rage. Who wants to bet on where the latest pool of junk is hiding?

The Dodd-Frank Act provides for liquidity when crashes, such as the upcoming disaster, occur. However, neither the law nor the Federal Reserve provide any relief to the renters, homeowners and credit card customers whose debts are being purchased by the Federal Reserve and remarketed.  When the Fed marks bonds to market, M3 is reduced. The money vanishes in the same way it was created, with a keystroke. This also deflates the financial markets. Experience has shown that simply throwing money out of the window of the Central Banks did nothing to improve the economy. Forgiving debt would have. Let us not repeat (or rather continue to repeat) the bad practices that left the economy in the doldrums. During the pandemic, the Federal Reserve has purchased bad paper, but without benefit to those whose debts are held in those bonds.

This time around, credit card balances and back rent should be forgiven when the Federal Reserve buys the bonds that hold the debt. Loans could also be written down, which would stop bondholders from benefiting from issuing bonds that should never have been issued in the first place. Renters of both commercial and residential property should be offered the chance to purchase their locations and homes, with assistance from Government Sponsored Enterprises, with their paper replacing the debt paper that has been securitized in Exchange Traded Funds. ETFs may take a hit, but what was falsely sold as AAA paper would actually become what was sold. Bad landlords, and Glantz demonstrates that Mr. Mnuchin and Mr. Ross truly are bad landlords, degrade properties so that the bonds that were issued for them to cash out are nowhere near the value at issue.

In 2009, the United States aided and abetted those who created the crisis. We are currently repeating the mistake. When the inevitable crisis occurs again, doing the right thing will also be the right medicine for the economy. I mention this issue here so that and General Provisions for this industry include these actions and because part of any bailout will require appropriated funds. In 2008, the bill passed with the promise that borrowers would be helped. Mr. Paulson lied. Let us act truthfully this time around. 

Add the Department of Commerce and related agencies to this committee, retaining the Department of the Treasury; Financial Service agencies, including CFTC, FTC, FDIC (Office of the Inspector General), NCUA, (Community Development Revolving Loan Fund), SEC, SBA and the United States Tax Court, thus creating a Commerce, Financial Services and the Treasury Subcommittee. 

Transfer the Department of Justice and related agencies to a Justice and General Government Subcommittee. The following general government agencies are included: Administrative Conference of the United States, FLRA, Federal Permitting Improvement Steering Council, GSA, MSPB, NARA, OGE, OPM and Related Trust Funds, Office of Special Counsel, Privacy and Civil Liberties Oversight Board, Public Buildings Reform Board, Selective Service System, United States Postal Service, Payment to the Postal Service Fund and Office of Inspector General, General Provisions, Government-wide. 

Move the Executive Office of the President and the Judiciary to the Legislative Branch Subcommittee is to assure that like the Congress, EOP is fully funded in the event of a government shutdown. Given the rising levels of partisanship in this Congress, this possibility is not unexpected. Because the salaries of the President and Judges cannot be constitutionally reduced, the funding of their staffs must also be as sacrosanct as the funding of congressional staff. If the Legislative Branch goes first, the Executive must go with it.