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Bush Administration: Give Us More Unreviewable Power; We Did So Well The Last Time We Asked

By Jack M. Balkin

The Bush Administration began in crisis. It now appears to be ending in crisis.

Following the 9/11 attacks, the Administration claimed that it needed enormous new powers to meet the threat of terrorism. Members of the Office of Legal Counsel spun out wild theories under which the President had virtually dictatorial powers when he acted under his authority as commander-in-chief. The OLC also drafted an extremely broad authorization for the use of military force (AUMF) that the Administration would later use as proof that Congress had already authorized virtually anything it wanted to do.

The past seven years have required enormous efforts to keep the Administration from making ever more outrageous claims of unreviewable authority and engaging in ever more unaccountable practices.

And now, as Ronald Reagan would say, there they go again.

The country is currently enmeshed in a very serious financial crisis, one of the most serious since the Great Depression. The causes of this crisis are many, but one of the most important is the deregulatory philosophy that has suffused this Administration. This philosophy has proved intellectually bankrupt and now threatens to bankrupt the country as well. Had the Administration been willing to rein in the financial excesses of the past seven years, the crisis might have been avoided with far less cost to the country.

In response to the crisis created in part by its own incompetence and ideological blinders, the Administration now asks for enormous new powers to run the economy in a form of state planning that would make Friedrich Hayek turn over in this grave but would surely bring a smile to Carl Schmitt's lips.

In the latest version of its plan, the Secretary of the Treasury is given authority to take 700 billion dollars (that's 700,000,000,000) from the federal budget and spend it pretty much however he likes, free from any oversight requirements or restrictions that apply to public contracts and especially free from any form of judicial review. (The technical term for this is "committed to agency discretion.").

Oversight and regulations of public contracts are designed to prevent malfeasance, corruption, self-dealing and conflicts of interest in the distribution of federal monies. (Here is a brief history of the Bush Administration's sorry legacy of squandering taxpayer money.). The Administration wishes to dispense with all of these restraints and precautions, just as it sought to run the Iraq war on no-bid contracts. That was bad enough, but here the dangers of bad deals and conflicts of interest are staggering. The Secretary is asking for authority to bail out Wall Street and enter into negotiations with financiers who include important parts of the political and financial base of the Republican Party. Not only will the Secretary be figuring out appropriate compensation for these people, he will also to a certain extent be deputizing a number of them to carry out a wide range of functions for the government.

Put differently, the Administration wants the Secretary to take over a sizable chunk of the nation's capital and insurance markets, and run them as a firm. It is a merger of public power and private capital that would have made a 1930s advocate of state corporatism proud. And because the Secretary's power is effectively unreviewable, he can make sweetheart deals with any or all of the firms and financiers that got us into this mess, providing handsome compensation packages to outgoing executives or, in the alternative, bring these failures into the government to run the new grand public/private business enterprise.

As the Secretary collects and sells off properties and debts, he alone determines who will be the beneficiaries of these sales, under what terms and conditions, and how the profits accruing from these sales will be distributed. In essence, the government will be buying assets from a group of people (many of whom caused or contributed to the crisis in the first place) that will then administer these assets for the government and then sell them back to the same group of people and/or their business associates. The possibilities for malfeasance, incompetence, corruption and conflict of interest are virtually endless.

I do not oppose emergency plans to preserve liquidity in markets and prevent a further crisis. What I do object to is plenary discretion in the executive in running the nation's financial markets, especially given the history of the past seven years, which has been a sorry parade of venality, incompetence, hubris and failure.

The modus operandi of the Bush Administration has been to use crisis to seize unreviewable power for the executive. Have we learned nothing from the last seven years? True, the face of our new Dear Leader is Mr. Paulson, and not Messrs. Bush and Cheney. But who, pray tell, do Mr. Paulson and his associates work for? If one truly credits the theory of the unitary executive so beloved by the Bush Administration, who, at the end of the day will these masters of the universe be taking orders from? And whose friends, business associates, and allies will stand to benefit from their deal making?

But there is more. The current secretary of the Treasury will soon be gone, replaced by the appointee of a new Administration, run either by McCain or by Obama. The next President-- and the next Secretary of the Treasury-- will face the very same temptations. If you think that the current Administration will behave itself appropriately-- a dubious proposition given its history-- do you have any guarantee that the next Administration will be equally well behaved? (As one commentator pointed out below, the Democrats have their share of friends and allies on Wall Street too. And don't even get me started about a McCain Administration advised by Phil Gramm.) We set a dangerous precedent by handing more and more unreviewable power to the president to nationalize large aspects of our economy and run them without effective oversight.

One would have thought that conservative, free market Republicans, of all people, would have warned us of the dangers of state planning and state control of the economy. Certainly they have spared no opportunity to denounce reform of our health care system as socialism. These accusations seem to be stilled, however, when the issue is bailing out the Republican Party's friends on Wall Street, while enlisting many of these friends in running the new state corporate enterprise, and selling the assets back to the same group later on.

It is a bit like the privatization of the old Soviet Bloc. Faced with crisis, the old communists became the new capitalists; they made the most of changed conditions by buying up old state businesses and running them as capitalist oligarchs. In America we see the same logic in reverse: Faced with a crisis of their own making, the old capitalists become the new communists.

It is not enough, however, to revel in the irony or the hypocrisy of the Administration's current plans. Two things are central: one is solving the financial crisis, and the other is doing so in a way that preserves constitutional values of oversight, checks and balances, and accountability to the rule of law. The government must have the power to act, but only the powers it actually needs, and not those it would enjoy having for the foreseeable future. It must be able to make decisions, but not without any accountability or oversight. That is what the debate is and should be about, and even though it nominally concerns the passage of an emergency measure, it is ultimately a debate of constitutional proportions.

Full post as published by Balkinization on September 21, 2008 (boomark / email).