Legal Commentary

Bloggers can?t agree on anything about fiscal commission, or political impact of Wall Street bill

By David Kopel

This week?s National Journal poll of political bloggers asked about the impact of the Wall Street reform issue on the midterm elections. Ninety-four percent of the Left bloggers thought that it would help Democrats a lot or a little. The Left was evenly divided between expecting the issue to hurt Republicans a little, or to have no impact. My guess was that it would hurt Republicans a little, although the result might depend on the substance of what the Republicans do: ?Republicans would be wrong, as a matter of policy and of politics, to oppose reforms which would reduce the ability of Wall Street to make the public pay for losing bets on complex financial instruments. It would be politically self-destructive for anyone to vote for a bill which provides congressional pre-authorization for more bailouts, including bailouts of the creditors of an insolvent Wall Street firm.? And yes, I?m aware the the bailout fund is now gone from the bill; but the bill still has authority for the executive branch to take money from prudent banks and give it to the reckless creditors of imprudent banks. In general, the bankruptcy laws provide a fair and orderly process to terminate the operations of a bankrupt financial services company; the Dodd bill, in contrast, provides nearly limitless executive power, almost no due process protections, and tremendous opportunity for abusing the system to help politically-favored creditors, or to threaten political opponents with federal destruction of their company.

Asked about what areas the President?s deficit reduction commission should focus on, the bloggers split. A hundred percent of the Left, and 50% of the Right (including me) wanted the commission to consider defense budget cuts. Huge majorities of the Right, and 36?46% of the Left wanted consideration of cuts in domestic discretionary spending, social security, and medicare. (I was for considering cuts in all these.) Eighty-seven percent of the Left, but only 37% of the Right, wanted consideration of tax increases. I favored an alternative approach: ?Instead of tax increases, elimination of corporate welfare could raise a great deal of new revenue.?

p.s. Readers looking for good ideas on corporate welfare cuts could start with this collection of materials, from my colleagues at the Cato Institute.

Full post as published by The Volokh Conspiracy on April 29, 2010 (boomark / email).