. >>> north carolina republican congressman patrick mchenry said wednesday that the era of the bailout is over. but that congress must not turn a blind eye or a def year to the state and local governments. these remarks came during this hearing of the house oversight and government reform subcommittee that he chaired. witnesses dhaka the fiscal condition of the states and municipalities. this is just under two hours. >> financial-services and fell out of the private and public programs. i will begin by making a in opening statement. i appreciate the witness is being here and taking the opportunity to be here. today's hearing is an opportunity to discuss growing concerns over the potential fiscal crisis looming for states and municipalities. over the past three years, we have seen a culture arise where every institution claimed it was too big to fail. and all too eager president and compliant converse kept putting taxpayers on the hook for trillions of dollars. our deficit has reached an all-time high end of the debt is crippling our economy. now we received about government policy and

, chairman make -- good morning chairman mchenry. henry, ranking member quigley, members of the subcommittee. thank you for having me testify on this topic. congress is right to worry about the choice between bailing out the states and watching as they risk repudiating their long-term obligations to bondholders and other creditors, including union members. the good news is that congress can still act to avoid this choice. the bad news is that a state bankruptcy statute is not one to be the answer. sometimes arriving at a solution means eliminating the bad solution. i will talk about some of the answers. the proposed bankruptcy statute for states say that special interests have taken over the state budgeting process, that there is no prospect of states getting their long-term pension obligations, a health care obligations to retirees, and debt obligations under control unless there is an outside force. in this scenario, states can't threatened bankruptcy to bring concessions from their creditors, specifically labor unions, affecting p

mchenry of north carolina for any remarks he may have. mr. mchenry: i want to thank my colleague from new jersey for yielding. let's be clear, this amendment will not save one single dime. my colleague from minnesota is simply misinformed. every dime spent in this sponsorship program is measureable. you can measure the number of media impressions you have, which the u.s. army's participation in nascar sponsorship netted $484 million media impressions, 34 million of which were offered specific army recruiting messages. so let's be very clear. this sponsorship is about recruiting. this amendment is about politics. in certain districts for certain groups of people. but the vast majority of nascar fans, 1-5 nascar fans have served or are currently serving in the u.s. military. it's a target-rich environment for armies recruiting message and a target-rich environment for the military and the military message. so i would just urge my colleagues to vote against this irresponsible amendment that is certainly politically charged but at the end of the

. -- patrick mchenry. >> i will begin by making an opening statement. i appreciate the panel of witnesses being here. today's hearing is an opportunity to discuss growing concerns over the fiscal crisis limning for states and municipalities. of the past three years, we have seen a culture arise where every institution claimed it was "too big to fail." taxpayers were put on the hook for trillions of dollars. debts have reached an all-time high and the national debt is crippling our economy. we are facing the consequences of bad government policy in another way. state and municipal governments who are preparing for budget shortfalls totaling roughly $135 billion this year. they are struggling under a burden of unfunded pension liabilities, tax revenues, and upper giving bond measures. we must understand the magnitude of this problem to avoid the reactionary at hot decision making that has fueled the federal action of the 2008 federal crisis. this is not about one analyst. looming bout eight a fiscal crisis and a lack of transparency in the pension obligat

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mchenry for one minute. >> thank you for yielding time. over the past decades, the derivatives market is as sophisticated and essential market for businesses of all tied. it is vital that the regulators empowered under dodd-frank continue to allow american businesses to manage the risk and protect themselves against market volatility -- volatility. this is about jobs. higher capital requirements could cost end-users on main street billions of dollars each year and put up to 130,000 jobs at risk. that is something we simply cannot afford to do while our economy is continue to regain its strong footing. i would encourage the regulators to keep this in mind, and the oversight hearings here in congress will keep that in mind. >> i'll yield back my time. >> miss hayworth. >> thank you. senior colleagues of rightly noted that united states is becoming increasingly hostile environment for investors. i am very concerned that our highest duty in this congress is to assure the security and freedom of our nation and our people. the specifics of what

mchenry: thank you, madam chair. i thank my committee chair for yielding time. i rise today in support of this resolution and recommending we review regulations and the order from federal agencies that they submit and control in the private sector. since the john set of the recession the driving policy in washington has been to grow our economy for the long term. some of our colleagues believe that we can achieve this by growing the federal government. however, more government and more regulations do not lead to more jobs. in 1988 ronald reagan stated that at the end it was free enterprise not government regulation, not high taxes or big government spending, but free enterprise that led to the building of a great america. over the past two years the american business owner has seen darker economic days than this country has seen in generations. yet our businesses still push forward innovating and adapting to the increasingly global marketplace that we live in. our government must do the same thing. astonishingly a number of our colleagues believe the federal reg

mchenry from north carolina. >> thank you for being here. it has been a long morning. i agree with our schedule. dr. de rugy, your previous answer to mr. wallenberg and your testimony you talk about the flypaper effect. the fact that these federal transfers with matching grants at the state and local level actually increase spending and over the long term increase taxation. this is particularly interesting in light of stimulus. with $150 billion roughly in direct federal transfers to state and thereby increase spending. the question, is the federal government really complicity in the state and municipal government financial woes by these operations? >> yes, it is. >> william elaborate? >> economic literature document this problem. and yet the system goes on. one of the things people demand is the fact that we touch federal spending going to the states. states will end up with big holes but on this assumption that the federal government has deep pockets and that is not the case. for every dollar that the federal government spends whether it is on the states or private s

mchenry. >> thank you, mr. chairman. the financial crisis inquiry commission was entrusted by congress to conduct the most significant financial investigation since the core investigation of the 1930s. and many were hopeful that it would result in a similar, unified report with a unified narrative. but the fcic has fallen well short of unity. in fact, it was no pecora. the fact that three different opinions have emerged from a body of only ten commissions brings into question the objectivity of the majority report. i'm also concerned about the lack of new findings provided in the majority report. which reads like a clipping service of already published books, articles and other works on the financial crisis. i look forward to speaking with our witnesses today, and i hope that they'll be able to shed some light on their process and answer questions that have been left unanswered in this report. >> the gentle lady from california, ms. waters, recognized for two minutes. >> thank you, very much, mr. chairman. i thank you fo

. >> north carolina republican congressman, pat trick mchenry, chaired a house oversight committee today on the financial debt fiesing state government and the municipal bonds that pay for it. this was one of the series of hearings the subcommittee allowed to hold. >> this comes to order. this is our first meeting of the t.a.r.p. financial services on programs. i will begin by making an opening statement. i certainly appreciate the panel of witnesses being here and taking the opportunity to be here. today's hearing is an opportunity to address growing concerns over the fiscal crisis for states and mew municipalities. we have seen a culture arise where every institution claimed it was too big to file. an all too compliant congress put taxpayers on the hook for trillions of dollars. the national debt is crippling our economy. now we're facing the consequences of bad government policy in another way. state and municipal governments preparing for short falls totally roughly $125 billion this year are struggling under a trillion dollar burden of underfunded pension liabilities, plummeting tax

mchenry from north carolina. >> cannonmack mr. chairman and thank you for being here on this long morning. dr. de rugy in your previous answer to mr. walberg and in your testimony you talked about the flypaper effect, the fact that these federal transfers with matching grants at the state and local level actually increase spending and over the long-term increases taxation. thisthis is particularly intereg in light of the stimulus, which with $150 billion roughly that was in direct federal transfers to states and thereby increasing the spending. so the question is, is the federal government really complicit in the state and municipal government's financial woes by these operations? >> yes. it is. >> will you elaborate? >> there is economic literature that actually documents this problem and yet, the system goes on. one of the things that people always bemoan is the fact that if we cut federal spending going to the states, the states are going to end up with big holes but it always rests on this assumption that the federal governmen

mchenry for one minute. >> thank you, mr. chairman for yielding time. over the past few decades the derivatives market developed into highly sophisticated and yet a central market for u.s. businesses for all sizes. therefore it is vital regulate toors empowered under dodd fringe continue to allow american businesses to manage their risk and protect themselves from market volatility. this is about jobs. a recent survey suggests that higher capital requirements could potentially cause end-users on main treat billions of dollars each year and put up to 130,000 jobs at risk. that is something we simply can not afford to do while our economy is attempting to regain its strong footing. i would encourage the regulators to keep this in mind and certainly our oversight hearings here in congress will keep that in mind, and i yield back. >> mr. luke enmire. >> thank you, mr. chairman. i'll yield back my time. thank you. >> miss hayworth. for one minute. >> thank you, mr. chairman. senior colleagues here have rightly noted that the united states is become increasin