By Stanley Kutler
Our “conservative” ideologues have steadily advanced their free-market myths during the past 40 years, insisting on minimalist government. Now those voices are quiet as we see the fallout of their laissez-faire notions. But once they reinvigorate financial institutions by transferring their huge debts to the taxpayer, we can be certain they will return.
Justice Antonin Scalia, a conservative favorite, has posited “originalism” in his notions of judicial power. Anyone who believes in a “living Constitution,” he said, is an “idiot.” Well then, John Marshall, our first great chief justice, his colleagues and those folks firmly wedded to our history (real conservatives?) are idiots. Maybe even Secretary of the Treasury Henry Paulson, whose bailout bill certainly is “broad construction” of the Constitution at its most extreme.
Paulson and his bailout accomplices propose the nationalization (what else is it?) of Wall Street’s reckless debts, actions that dwarf the excesses of the Gilded Age and the 1920s. The government will assume the bad debts of our financial “industry,” a remedy that will restore “free markets” and “normalcy.” All is forgiven; unfortunately, all is also forgotten. It is an “investment,” Paulson said—without irony.
The only alternative, we are told, is unthinkable. The only? That remains to be seen—alas, even offered. Sen. Richard C. Shelby, R-Ala., said that before signing off on the bill he wanted “to make sure we’ve exhausted the alternatives.” Pure congressional blather; Paulson never answered.
John Marshall believed in the elasticity of congressional power to do things “necessary and proper” to carry out the legislative branch’s other powers. As such, he might have broadly approved a bailout. But whether he would have accepted this legislation and its blank check for power is dubious. Marshall would not concede that discretionary power meant “absolutely indispensable”; there were limits—the limits of the Constitution itself.
The practitioners of something called the “unitary executive” have disdained (once again) any notions of checks and balances by other branches of government. Congress is there only for the formality of enacting assumed powers into law. Beyond that, the White House’s grasp for absolute power is breathtaking.
The administration’s version of the bailout legislation provides for review in Section 8, but the Catch-22 is that there is no review. The secretary’s “decisions” are to be “non-reviewable, committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” The non-reviewable provision, along with its other purposes, allows the secretary unfettered, unchecked authority to enter into contracts “without regard to any other provision of law regarding public contracts.” Now we know the meaning of audacious.
Wall Street loves this bailout. It relieves major banks and investment houses of “their mountainous rotten assets,” as William Greider recently noted. Wall Street folks usually reject redressing environmental losses (polar bears be damned), but “what’s not to like if you are a financial titan threatened with extinction,” Greider added.
“I share the outrage,” Secretary Paulson confessed. “There’s a lot of blame to go around.” Just don’t expect him to point any fingers.
Wall Street will not trouble its collective consciousness with worry over the Constitution. But this bailout bill is virtually unprecedented in its assumptions and its reach for unchecked power. Even Franklin D. Roosevelt’s bold, sometimes hasty, emergency legislation of the Depression wasn’t this audacious.
Certainly, if New Deal Congresses had discarded judicial or administrative review, judges in the mold of Marshall, covering the political spectrum, probably would have asserted such power as derived from the Constitution itself.
It is, after all, a little late in the day to resurrect the idea that the Constitution did not explicitly provide for judicial review. The non-reviewable dictate of this legislation might be an interesting challenge for Scalia’s “originalism,” as well as his political biases. Oh well, the Bush administration’s draft allowed Congress to fill in the blanks, and it may call the bill whatever it wishes. The Richard Cheney Memorial Act sounds just about right.
Stanley Kutler is the author of “The Wars of Watergate.”
AP photo / Manuel Balce Ceneta
Treasury Secretary Henry Paulson, left, accompanied by Federal Reserve Chairman Ben Bernanke, testifies before the House Financial Services Committee.