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Zephyr Teachout Headshot

Who Decides? The Most Terrifying Part of the Proposed Bailout

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"Helicopter Ben" Bernanke and "the Hammer" Henry Paulson have just sent Congress a three page draft of a 700 billion dollar piece of legislation.

Set aside for a minute the haiku-like content of the Helicopter-Hammer plan, and think about what it really asks for: almost unlimited power. The Professor and the Madman propose to take over the power of the purse (or a big fraction of it) from Congress, and, by implication, from us.

There are two parts of the plan--the content and the powershift--and while both should worry you, the powershift should be unacceptable. It creates a mini-monarchy with control over almost a trillion dollars in the most unrepresentative part of the most unrepresentative branch of our government. The text of the legislation:

+ Gives the power to spend 700 billion dollars.
+ The Secretary need only report to Congress every six months.
+ The Secretary can take actions he deems "necessary" to fulfill the act's purposes.
+ The Secretary can make contracts.
+ The Secretary can make appointments.
+ Any decisions by the Secretary in spending the money are "non-reviewable" and "may not be reviewed by any court of law or any administrative agency."

Basically, it's a fire-sale on self-government.

Almost all of the draft words in the draft legislation are designed to insulate the power of the Secretary of the Treasury; few words are given to what this new American King would actually do with this power.

Make no mistake, the essence of this plan is a transfer of power from the Congress to the Secretary of the Treasury, who will have power over a budget larger--larger!--than entire amount spent on the Iraq war so far, with no meaningful check on his power.

For all Congress's faults, it is one of the few ties citizens have to governmental power. We can individually and collectively appeal to our representatives in ways that are simply impossible to do directly with the modern Presidency.

Some of Congress's worst moments in recent times have been when it acceded to power grabs by the executive branch: giving Bush the power to go to war with Iraq, for example. Contrary to those who want to see the President with virtually unlimited power, our constitution rests on the idea that the President will execute the laws, not make them. The Founding Fathers were anxious not to create a King, and yet no King ever had personal discretion over $700 billion.

The danger, according to the Constitution's crafters, lay when the power of the purse and the power of appointments were shared by the same body. And yet that's exactly what this legislation would do.

If the Helicopter-Hammer plan passes, it should pass only with serious constraints and constant management by the legislative branch. Sporadic oversight is not enough. The buck must stop with Congress, not with the Professor and the Madman.

Congressmembers may want to delegate away its power, and cash in their paychecks without doing the tough work of representing our economic interests on a daily basis. It is up to us to tell them that we don't want that. A choice to delegate, we must tell them, is a choice to give the power of the people to the new King of the Treasury. If we've learned anything in the last few years--in the stock exchange, in the war, in our natural disasters--it should be that more democratic oversight, not less, is needed in big decisions.

Economic policy is extremely difficult. We may now face a crisis that demands decisive action. But the governments response--our response, inasmuch as it is still a self-governing country--doesn't have to be so decisive that it warrants giving up on the democratic project.