Topic: Government and Politics

Who’s Running the American Economy Now?

Who’s the top dog in American business these days? Washington, says the Washington Post:

That’s one of the main themes of this week’s Capital Connection conference put on by the Mid-Atlantic Venture Association… . This time, policy wonks and government insiders will also be there.

Reed E. Hundt, former Federal Communications Commission chairman, and Tommy G. Thompson, former Health and Human Services secretary, will be speaking, as will VentureBeat blog author Matt Marshall and GigaOm author Om Malik, two well-known technology bloggers. Washington hasn’t been a frequent stop for them in the past.

It’s just one more sign of the region’s growing clout in the business and technology world. This is where stimulus dollars are doled out, where the economic recovery is taking shape, and where regulations — many of which directly affect businesses — are being crafted and rewritten. Of course, lawyers and lobbyists are getting a great deal of business helping folks find ways to tap into stimulus money… .

Companies familiar with the Beltway culture are well-positioned to benefit from the government’s increased role in nearly every sector… .

The conference, which is open to the public for the first time, demonstrates the growing nexus between the business community and the government, said Julia Spicer, MAVA’s executive director.

“The spread between the two worlds has tightened a bit,” she said. “The economy is the real focal point” of the conference, “and the government has a definite role in that.”

Beyond Irony, Part II

In a previous post, I noted the irony of taking advice from Karl Rove on how to fight big government. It appears that Rove is not alone in having a battlefield conversion. According to the Wall Street Journal, the Chamber of Commerce is planning to spend $100 million as part of a “Campaign for Free Enterprise.” This sounds great, and I hope it helps, but is it rude of me to point out that this is the same organization that endorsed the bailout last year and the so-called stimulus this year?

Beyond Irony

Karl Rove should have been named Man of the Year at some point by the Democratic National Committee. The political consultant/Bush adviser played a big role in expanding the burden of government, convincing Bush to saddle the nation with fiscal disasters such as the “no-bureaucrat-left-behind” education bill, the corrupt farm bills, the pork-filled transportation bills, and the horrific new entitlement for prescription drugs. He also helped ruin the GOP image with his inside-the-beltway version of “compassionate conservatism,” thus paving the way for big Democratic victories in 2006 and 2008.

I can understand why libertarians have no desire to listen to his advice, but I’m baffled why Republicans or conservatives would give him the time of day. Yet he is a constant presence on FOX News and has a weekly column in the Wall Street Journal. With no apparent irony, his latest WSJ column is entitled “How to Stop Socialized Health Care.” Too bad he didn’t follow his own advice in 2003 when pulling out all the stops to enact the biggest entitlement in four decades.

A Nation of Lawlessness

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.

The Politics of Stimulus Spending

USA Today investigates how members of Congress are “working behind the scenes to try to influence how the [stimulus]  money is spent.”

Congress and President Obama proudly noted that there were no earmarks in the $787 stimulus bill. But…

Ten of 27 departments and agencies receiving stimulus money have released records of contacts by lawmakers under Freedom of Information Act requests USA TODAY filed in April. Those records detailed 53 letters, phone calls and e-mails recommending projects from 60 members from February through the end of May. Thirteen of those lawmakers voted against the stimulus package.

Critics of the stimulus bill pointed out that government money is always politically directed. It’s little consolation to be proven right.

Rotating Congress

In today’s Washington Post, Dana Milbank does a typically brilliant job deconstructing the activities of Congress. He looks at how members of the various defense committees put their energies into fighting for home-state hand-outs rather than focusing on broader defense issues from a national perspective.

The dominance of parochial interests over the general public interest is, of course, a long-standing problem in Congress. Members from cotton-growing states gravitate to the farm committees in order to defend cotton interests, while members from inner cities gravitate to committees overseeing urban affairs to defend programs that subsidize their constituents.

The result is that Congress spends a lot of money on items that don’t have broad public support, and it spends little time actually considering policies from a national perspective.

A partial solution to the problem would be mandatory committee rotations every two years in the House and Senate. All committee assignments would be made by random selection at the beginning of each Congress.

People will say: “You can’t do that because members on particular committees are often experts in their field.” That would be a good argument if members used their expertise to serve the general interest of the public. Rep. Jack Murtha is an expert on defense issues, and in theory he could be spending his and his staff’s time probing Pentagon operations, reviewing administration defense strategies, overseeing procurement programs to reduce waste, and other public-spirited activities.

But that is apparently not what Murtha and most other members of Congress spend their time doing. Anyone who watches congressional committee action on C-SPAN can see the pattern that Milbank describes–members use their brief time with important witnesses to get in on-the-record statements in support of favored special interests. And their staffs spend most of their time figuring out how to maximize the home-state grab from the budget, not examining big-picture policy issues.

We have a $3 trillion government because members of Congress love to spend money, as a sort of general proclivity. But they are particularly addicted to spending money on their home states. Random committee assignment would help to disrupt that addiction, and it would allow members to adopt a more neutral and critical eye on matters in front of the committees that they were assigned.