In a new Cato Daily Podcast, Director of Information Policy Studies Jim Harper discusses overreaction to terrorism and what is required to avoid it.

In its story yesterday about Obama pushing for release of the second half of the TARP boodle, the New York Times reported that

Lawmakers are angry about many aspects of the bailout, which they intended for the government purchase of troubled assets, particularly mortgage-backed securities, but instead has been used to recapitalize banks and even prop up failing Detroit automakers.

Initially, I had a lot of sympathy for this critique. I had a little burst of outrage myself right before Christmas when I read the following quote from White House spokesman Tony Fratto, explaining why the White House was going to use the TARP authority to bail out GM and Chrysler–despite Congress’s having just voted down the auto bailout:

“Congress lost its opportunity to be a partner because they couldn’t get their job done,” Fratto said. “This is not the way we wanted to deal with this issue. We wanted to deal with it in partnership. What Congress said is … ‘We can’t get it done, so it’s up to the White House to get it done.’ ”

So by not giving the president the power to bail out the automakers, Congress has “lost its opportunity to be a partner,” and the president’s going to do it anyway? By what authority? The TARP statute gives the Secretary of the Treasury the power to buy “troubled assets” from “financial institutions.” Yet in the past three months TARP’s morphed from a plan to buy toxic mortgage-backed securities, to one that involves buying shares in banks (like Wells Fargo ) that aren’t themselves troubled, to a program giving loans to car companies, which surely can’t qualify as “financial institutions.”

More Bush administration lawlessness, I thought. We already knew they didn’t care about the Constitution. Now they’re showing they can’t be restrained by plain statutory language. 

And then I looked at the statute. And it turns out the definitions of “troubled asset” and “financial institution” are so gobsmackingly, irresponsibly broad, that the administration has at least a colorable argument that it can legally reshape the bailout in the ways it has. “Troubled assets” include:

any… financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability 

And “financial institution”:

means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States [emphasis added]

That’s why, as the University of Chicago’s Randy Picker argues, you can probably “fit cars under the TARP.” (For a contrary argument, see here ).

Given how far the administration has pushed loose legislative language in the past, can Congress credibly claim to be surprised here? Lawmakers may, as the Times reports, be “angry” about the scope of the bailout, but when they write language that broad, their outrage is more than a day late and $700 billion short.

• Writing for Independent Advocate, a political blog devoted to “independently minded news analysis,” Wes Kimbell quotes Senior Fellow Richard W. Rhan’s December op-ed about Obama’s proposed stimulus plan.

• The Hill’s Congress Blog posts analysis from Senior Fellow Michael D. Tanner on Barack Obama’s proposals for Social Security and Medicare.

• The International Law and Policy Blog links to Cato Trade Policy Analyst Sallie James’s appearance on Reason TV, discussing presidential trade policies.

• Blogging for the Weekly Standard, Brian Faughnan cites Director of Health Policy Studies Michael F. Cannon’s recent post on Obama’s proposal to eliminate Medicare Advantage, which would oust nine million seniors from their health plans.

• Baltimore Sun financial columnist and blogger Jay Hancock plugs an upcoming forum at Stanford University on the similarities and differences between liberals and libertarians, featuring Cato Research Fellow Will Wilkinson and Vice President for Research Brink Lindsey.

• Writing for the Peace Freedom & Prosperity Movement Web site, Michael Shanklin discusses Cato’s video on the auto bailout.

In their zeal to achieve universal health insurance coverage, President-elect Barack Obama and congressional Democrats are likely to exacerbate a real crisis in America’s health-care sector.

Americans generally receive medical care from a fragmented collection of doctors, hospitals, pharmacists, and other health care providers. All too often, those providers don’t communicate and collaborate. The result is too many unnecessary services and too many medical errors. The problem is particularly acute when it comes to complex patients with multiple conditions.

In a paper released today by the Cato Institute titled, “Does the Doctor Need a Boss?”, Arnold Kling and I explain that government prevents coordination of care, and that improving coordination requires reducing government’s role:

Medical care typically lacks coordination, in part because payment systems such as Medicare have not kept pace with technology and patients’ changing needs, and because many doctors are unwilling to cede authority to a boss. Medicare and other payers continue to pay doctors according to the independent-craftsman model. For example, Medicare’s payment system generally does not reward coordination. Instead, Medicare and other fee-for-service payers tend to favor technologically intensive specialist services over those of general practitioners who might be best suited to play the role of project manager…

In the home-building analogy, it is as if the concrete contractor, the drywall contractor, the electrician, and the plumber all refuse to work under a general contractor. Instead, they each try to do their jobs independently, regardless of the impact on the rest of the project.

The culprit is not market forces, but government interventions that protect physicians from competition from better-coordinated providers.

Licensing of medical professionals, state health insurance regulations, corporate-practice-of-medicine laws, and policies that encourage fee-for-service payment (i.e., Medicare, Medicaid, and the federal tax code) hold at bay the market forces that would improve coordination of care…

Improving coordination of care requires two consumer-empowering reforms:

First…consumers should control the money that purchases their health insurance, and should be free to choose their insurer and health care providers.

Second, state licensing regulations make it difficult for corporations to design optimal work flows for health care delivery. Under institutional licensing, regulators would instead evaluate how well a corporation treats its patients, not the credentials of the corporation’s employees. Alternatively, states could recognize clinician licenses issued by other states. That would let corporations operate in multiple states under a single set of rules and put pressure on states to eliminate unnecessarily restrictive regulations.

By centralizing control in Washington, the ruling Democratic left will give new strength to the protectionist forces that have blocked quality improvements in health care.

Many of you have seen the video I narrated explaining why big-government “stimulus” schemes do not make sense. That mini-documentary discussed the theoretical shortcomings of Keynesianism and also reviewed the dismal results of real-world Keynesian episodes.

While the video has been very successful, both measured by the number of “views” and positive feedback, some have suggested that it would be good to produce shorter videos. The hypothesis is that most people have only a limited interest in economics, so a brief video is more likely to attract viewership. My personal bias is that longer videos are sometimes necessary to allow an appropriate level of analysis and explanation, but I do believe in letting the market decide. As such, I invite you to watch this condensed, four-minute video debunking Keynesian fiscal policy.

Please feel free to provide feedback. For purposes of comparison, the original video can be seen here.

Hillary Clinton is expected to have a smooth confirmation hearing today. Bizarre. If we had more citizen-legislators instead of professional politicians, some of the following questions would be asked at today’s hearing:

Did you request, or see, any of the hundreds of FBI files that were improperly acquired by the Clinton White House? Who hired Craig Livingstone anyway?

Why did you fire Billy Dale?

What is your view of the war power? Can (Should) the President attack another country without a declaration of war from the Congress?

What is your view of the Tenth Amendment? Is there any subject beyond the purview of a federal law or spending program?

Exactly what did you and your Husband take from the White House when you left?

Did you or your husband make any arrangements to get money to Susan McDougal since Bill left the White House? Do you know why she was pardoned?

Do you plan to hire Sandy Berger?

To revisit Clintonian policies and practices, go here and here.

President Bush says that he “chucked aside my free-market principles” when faced with the current financial crisis. Well, duh!

The president said that he had no choice because he was “concerned that the credit freeze would cause us to be headed toward a depression greater than the Great Depression.” Even if one accepts that rather contestable premise, one is tempted to ask what caused him to chuck aside conservative and free market principles when he:

• Increased federal domestic discretionary spending (even before the bailout) faster than any president since Lyndon Johnson.
• Enacted the largest new entitlement program since the creation of Medicare and Medicaid, an unfunded Medicare prescription drug benefit that could add as much as $11.2 trillion to the program’s unfunded liabilities;
• Dramatically increased federal control over local schools while increasing federal education spending by nearly 61 percent;
• Signed a campaign finance bill that greatly restricts freedom of speech, despite saying he believed it was unconstitutional;
• Authorized warrantless wiretapping and given vast new powers to law enforcement;
• Federalized airport security and created a new cabinet-level Department of Homeland Security;
• Added roughly 7,000 pages of new federal regulations, bringing the cost of federal regulations to the economy to more than $1.1 trillion;
• Enacted a $1.5 billion program to promote marriage;
• Proposed a $1.7 billion initiative to develop a hydrogen-powered car;
• Abandoned traditional conservative support for free trade by imposing tariffs and other import restrictions on steel and lumber;
• Expanded President Clinton’s national service program;
• Increased farm subsidies;
• Launched an array of new regulations on corporate governance and accounting; and
• Generally did more to centralize government power in the executive branch than any administration since Richard Nixon.

One begins to detect a trend.