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22nd September 2008 Charles J. Brown
09:45 am

The Bailout Bill: A Threat to the Constitution?


By now my fellow bloggers have spilled plenty of bytes on the serious problems with the Administration’s bailout proposal.  I have nothing new to add to that discussion, but I do want to share some thoughts on one provision of the bill that many people have overlooked. If the current bailout proposal passes unamended, Congress will have just given Henry Paulson a degree of power that no Cabinet Secretary — or President for that matter — has ever had.  This is Section 8 of the bill as it now stands:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

This language represents nothing less than the institutionalization of the concept of an all-powerful unitary executive that cannot be checked by either Congress or the courts.  It would represent one of the greatest expansions of Presidential power in American history.  As written, not even the Supreme Court would have the authority to overturn it as unconstitutional:

As Congress prepares to act speedily on the grant of power to the Treasury Secretary to buy up $700 billion worth of bundles of bad mortage loans, the Supreme Court may watch in fascination, but it would have no power to second-guess the “bailout,” if enacted.  Given the sweep of the authority that would go to the Secretary, it might raise some constitutional questions. But there would be no way to test those in court.

According to press accounts, when Bernanke and Paulson went up to Capitol Hill to brief Congressional leaders last week, they painted a terrifying portrait of economic collapse.  They warned lawmakers that we are teetering on the edge of a precipice, and that Congress needed to take urgent action to prevent a disaster.  Congressional leaders emerged from the meeting looking like they had been hit by a bus.

Members of Congress definitely need to act, but they should keep in mind that the Bush Administration used similar rhetoric to convince them to pass post-9/11 restrictions on civil liberties (most notably the Patriot Act); to authorize the invasion of Iraq; and to adopt both the Military Commissions Act (including the provision exempting CIA agents from laws banning torture) and the recent FISA bill. To put it another way, every time this Administration has convinced Congress to adopt laws that expand executive power or erode civil liberties, it has scared Congress into going along it.

This time the threat is not terrorism but economic collapse.  But don’t kid yourself:  Section 8 could represent a vast expansion of executive authority and further erode the Constitution’s separation of powers. To me, all the other questions about this highly problematic bill pale in comparison.  Congress must not agree to this bill as long as the current iteration of Section 8 remains.

This entry was posted on Monday, September 22nd, 2008 at 9:45 am and is filed under global economy, politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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