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Meet the Odd Couple (Our Current Constitutional Dictators re the Economy)

By Jack M. Balkin

Tomorrow's NYTimes will include a just-posted article by Peter Baker on how "A Professor and a Banker Bury Old Dogma on Markets." It is, of course, about Ben Bernanke (the professor) and Henry Paulson (the banker). I include some passages from the article that are especially interesting if one is wearing glasses with a Schmittian lens, together with my italicized interpolations:

Talking into the speaker phone on a coffee table in his office, Mr. Bernanke told Mr. Paulson that it was time to stop treating the symptoms by bailing out distressed companies and instead start attacking the root problem with a comprehensive strategy.

Congress would have to sign off, and it would fall to Mr. Paulson, as the envoy of the executive branch, to take the lead. [What is meaning of "sign off" in this sentence? Is this the equivalent that Congress would genuinely be called on to "decide," after a suitably deliberative process, or, rather, that it would have to rubber-stamp a decision basically made by the Professor and the Banker?]

Mr. Paulson understood. He had been reluctant to send lawmakers a plan that might not pass, worrying that a rejection would only further damage the markets. During two conference calls Wednesday night and Thursday morning, he agreed that they had no choice. [I.e., prior to this past week, there was some fear that, for better or worse, Congress would exercise independent judgment and reject any "plan" that Paulson, speaking, presumably, in behalf of George W. Bush, might send to Congress. Now, this fear no longer operated.]

?It just happened dramatically,? Mr. Paulson said in an interview on Friday. ?There was only one way that we could reassure the markets and deal with a very significant and broad-based freezing of the credit market. There was no political calculus. It was overwhelmingly obvious.? [I.e., the truly "exceptional situation," calling for the suspension of the normal "political calculus," had arrived.]

Just like that, Mr. Bernanke, the reserved former Ivy League professor, and Mr. Paulson, the hard-charging former Wall Street dealmaker, started what would be the government?s largest economic rescue in modern times, one that rivals the Iraq war in cost and at the same time may redefine Washington?s role in the marketplace for years to come. [Again, the word "started" is interesting. Would it be accurate to say that, in Schmittian fashion, they basically "decided to put into operation the government's largest economic rescue....."]

The plan to buy $700 billion in troubled assets with taxpayer money was shaped by two men who did not know each other until two years ago and did not travel in the same circles, but now find themselves brought together by history. If Mr. Bernanke is the intellectual force and Mr. Paulson the action man of this unlikely tandem, they have managed to create a nearly seamless partnership as they rush to stop the financial upheaval and keep the economy afloat.

Along the way, they have cast aside the administration?s long-held views about regulation and government involvement in private business, even reversing decisions over the space of 24 hours and justifying them as practical solutions to dire threats.

?There are no atheists in foxholes and no ideologues in financial crises,? Mr. Bernanke told officials last week, according to one participant. [Is this a credible statement? It probably depends on what one means by "ideologue," of course. Is the argument that a "financial crisis," like other crises, generates the capacity to see things more clearly and suddenly to realize that the supposed commitments of a lifetime (or at least a political career, see, e.g., John McCain on regulation) are profoundly mistaken? Or is it just possible that the "plans" being improvised by the Professor and the Banker continue to reflect ideological perspectives even if not, one hopes, the kinds of crass "low-political" considerations that would surely be present if, say, Karl Rove were playing his accustomed role of asking only "what is good for the Republican Party"?].

The improvisational nature of their effort has turned President Bush and Congressional Democrats into virtual bystanders, sometimes uncertain about what comes next and left to wonder about the new power dynamics in the capital. [Schmitt would certainly be unsurprised that the legislature would increasingly become irrelevant, filled with bloviators who speak to the "bases," while "real governance" goes on within a sometimes improvisitorial executive branch. "Improvisation," of course, is just another synomym for "decisionism." The "constitutional dictator" in the given situation a) gets to define the existence of the emergency and then b) gets to offer proposed solutions to said emergency.] Seemingly every time lawmakers tried to get a handle on what was happening and what role they might play with elections around the corner, Mr. Paulson and Mr. Bernanke would show up again on Capitol Hill for another evening meeting with another surprise development.

Returning to an earlier post, and a criticism leveled by Marty Lederman, it remains totally unclear whether the Professor and the Banker have "transgressed" any laws, and I am willing to believe that the answer, as Marty has suggested, is no inasmuch as certain New Deal legislation can be interpreted as sufficient delegation to justify the Administration's (and the Fed's) actions. But then there are two other questions that are relevant to other debates about Bush Administration actions:

1) To what degree were lawyers consulted by Bernanke and Paulson concerning their legal powers?

2) Perhaps even more to the point, did they receive any advice that they could not engage in any particular action(s) deemed "neessary" to resolve the crisis and to prevent the "cataclysm" of a meltdown of the US (and world) economic order, or did they receive consistently "happy endings," i.e., that they could in fact do whatever they deemed "necessary and proper" (to coin a phrase)? And, also to the point, what was the phenomenological disposition of any lawyers consulted? Were they rigorously detached and independent, ready to give bad news along with happier conclusions, or were they basically like John Yoo, ready (and willing) to read any ostensibly supportive legislation in a maximalist way that would justify whatever Bernanke and Paulson might want to do? (How critical would we be if the answer turns out to be the latter?)

I note another story just posted on the Times, "Administration is Seeking $700 Billion for Wall Street Bailout." I quote its first paragraphs:

The Bush administration on Saturday formally proposed to Congress what could become the largest financial bailout in United States history, requesting unfettered authority for the Treasury Department to buy up to $700 billion in mortgage-related assets.

The proposal, not quite three pages long, was stunning for its stark simplicity. It would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt.

Staff members from Treasury and the House Financial Services and Senate banking committees immediately began meeting on Capitol Hill, where negotiations were likely to be complicated but quick. Democratic Congressional leaders have pledged to approve legislation by the end of this week.

The Bush Administration, even in its waning days, certainly seems to like "unfettered authority." So is this the equivalent, applied to the economic sector, of the "national-security" unfettered authority asked for, and basically granted, by a submissive and scared Democratic Congress? Such legislation, of course, can be made to fit within "rule-of-law" paradigms if all that is required is ex-ante legislative acquiescence to the executive. But, as I have argued earlier, this is far, far away from any civics-book vision of how our ostensibly separation-of-powers system is supposed to work. I do wonder if Brandeis, Cardozo, and Stone would label what appears, at least today, to be the proposed legislation, which will presumably be added to the U.S. Code within the week, as being "delegation run riot" and whether we should care what the answer is.

A bonus question: Do any of us want, or expect, Senators McCain, Obama, and Biden in effect to suspend their campaigns over this next week in order to return to Washington to study carefully the Administration legislation and to participate in whatever will count as legislative hearings about it? Sarah Palin, of course, can campaign on her own and continue to dazzle the country with her deep knowledge of economic issues (but I digress...)

Full post as published by Balkinization on September 20, 2008 (boomark / email).