The matter of Chrysler’s bankruptcy seems to have rendered quaint our system of checks and balances. President Obama is breaking the law and the other two branches are letting him get away with it. One can probably understand how a smitten public might casually allow this president a stipend of unconstitutional acts, since he doesn’t scowl like Nixon or stutter like Bush. But, even a popular president (in particular, a popular president) must be held in check by the legislative and judicial branches.
And that’s not happening.
On Tuesday at 4:00 pm, Justice Ruth Bader Ginsburg "stayed pending further order" the bankruptcy-related transactions of Chrysler, giving hope the Supreme Court might hear the appeal filed on behalf of certain Indiana state pension and construction funds, who claim that their property rights as secured creditors were violated by the forced sale and that the use of Troubled Asset Relief Program funds to support Chrysler and facilitate its restructuring was illegal. Only 28 hours later, the Supreme Court decided against taking the appeal, despite the seemingly compelling issues at hand.
Just as the Bush administration was telling Congress last September that there was no time to debate the merits of a financial bailout and that the only course was to give Treasury Secretary Paulson carte blanche immediately to spend $700 billion, the Obama administration was telling the Supreme Court this week that time was of the essence and that Fiat would walk away from the Chrysler deal if it wasn’t allowed to proceed right away. Was that the decisive factor in the Supreme Courts rejection of the appeal? It seems to me the appeal contains some serious constitutional issues worthy of judicial consideration (consideration that goes beyond merely rubber-stamping the Obama administration’s pre-packaged, politically-driven bankruptcy plan for Chrysler, which is what Judge Gonzalez appears to have done).
But it’s now a done deal, possibly facilitated by illegalities.
I’m struck by the relative quiet about this issue (in the mainstream media and the blogosphere). Maybe we’re all just too numb and shell shocked by the blitzkrieg of government interventions over the past 9 months that it’s no longer possible to feel alarmed or outraged by just another government act that would have been unthinkable this time last year.
Well wake up!
There is a compelling legal argument against using TARP funds to support automobile producers. (Obviously, there is a compelling economic argument, as well.) Convincing the courts to hear the argument and subsequently persuading judges (probably up to the Supreme Court) of its merits will likely be the last chance to spare us the nationalization of General Motors.
As you may recall, there wasn’t a whole lot of clarity about how the Treasury’s use of TARP funds would be limited or defined. Lots of discretion was granted the Treasury Secretary. However, Section 101(a)(1) of the law establishing the TARP stipulates:
"The Secretary is authorized to establish the Troubled Asset Relief Program (or ‘TARP’) to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary, and in accordance with this Act and the policies and procedures developed and published by the Secretary." (My emphasis).
Neither Chrysler nor GM is a financial institution and therefore neither can receive TARP money. There's the argument, plain and simple. Congress authorized funds for a defined use; the executive breached those boundaries, and thus acted illegally. Is it more complicated than that?
President Bush was the first to break the law by authorizing $17.4 billion in TARP funds for GM and Chrysler, circumventing the wishes of Congress, which had recently voted against an auto bailout. And President Obama has followed suit, providing funding the Chrysler and GM during bankruptcy.
If there's any doubt that TARP funds were not to be used for automobile companies, consider the fact that the same House of Representatives that passed the legislation creating the TARP in October also passed a bill specifically authorizing the use of TARP funds for automobile companies in December. (There was never a vote in the Senate so it never became law.) Such legislation wouldn't have been necessary if the intent of Congress was to allow TARP funds to be used for automakers originally. Thus, there are two conclusions to draw here. First, the 110th Congress didn’t think the TARP legislation, which it had passed two months earlier, allowed TARP funds to be used for automakers; and second, Congress was too cowardly to bring the matter to the Supreme Court, thereby exercising its constitutional responsibility and allowing the judiciary an opportunity to exercise its.
Let's hope the judiciary finds the opportunity to check the legality of the executive's implementation of the legislature's instructions, as far as the people's money is concerned.