Who has benefited?
America’s bailout economy started many administrations ago, but really went Big Time under President George W. Bush . . . and then went Enormity Time with President Barack Obama.
The Washington Post provides the latest in bailout news by noting an inter-departmental squabble:
The Special Inspector General for the Troubled Asset Relief Program said Treasury approved all 18 requests it received last year to raise pay for executives at American International Group Inc., General Motors Corp. and Ally Financial Inc. Of those requests, 14 were for $100,000 or more; the largest raise was $1 million.
Though this is all quite scandalous, don’t expect policies to change or heads to roll — barring a joint Tea Party/Occupy uprising. The nature of the modern “regulatory” state is clear: government bureaus are quickly captured by the industries they aim to regulate. It’s an old story. The revolving door between business and bureaucracy is as well-established as between journalism and politics.
So why do we have bailouts?
- They show that politicians are “doing something”;
- They mimic the welfare state logic of “helping the poor” (if, with caustic irony, by stuffing the wallets of the rich);
- They aggrandize the showy machinations of the legislative and executive branches at the expense of the branch of government designed to handle massive business failure, the courts.
Perhaps Americans shouldn’t have voted in either an MBA grad (Bush) or a constitutional lawyer (Obama). Maybe what the country needs is a bankruptcy lawyer in the White House.
This is Common Sense. I’m Paul Jacob.
A recent court decision has slowed—dare we hope, stopped?—the erosion of an important check on executive power. This is the constitutional provision that the president’s appointment of certain high officials be subject to Senate approval.
Trevor Burrus of the Cato Institute reminds us that presidents have sought to circumvent the advise and consent requirement since the days of Warren Harding.
The Constitution enables the president to make appointments when the Senate is in recess, i.e., between sessions. (In the days of the Founders, that hiatus lasted many months.) Starting with Harding, though, presidents began making appointments during so-called intra-session “recesses,” or breaks within a regular session. These “recesses” were as brief as ten days by the time we got to Clinton and Bush II.
In 2007, the Senate began conducting brief pro forma sessions within these “recesses” to prevent appointments from being made without its consent. Last year, President Obama counter-moved by declaring that he had authority to determine what constitutes a session. On this basis he made several appointments sans the Senate’s consent.
The DC Court of Appeals has now ruled the maneuver unconstitutional. “The power of a written constitution lies in its words,” writes Chief Judge David Sentelle. “When those words speak clearly, it is not up to us to depart from their meaning in favor of our own concept of efficiency, convenience, or facilitation of the functions of government.”
Do presidents sometimes find the Constitution inconvenient? Too bad.
This is Common Sense. I’m Paul Jacob.
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John Bright
The corn law was intended to keep wheat at the price of 80s. the quarter; it is now under 40s. the quarter.
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Ray Bradbury
There is more than one way to burn a book. And the world is full of people running about with lit matches.
During the presidential campaign, Barack Obama was criticized for telling business folks “You didn’t get there on your own. . . . You didn’t build that.”
He meant something more than the truism that a successful businessperson functions not in splendid isolation but in cooperation with others, like employees and vendors (presumably compensated). He meant that successful people shouldn’t be so proud of their virtues. Also they must pay more taxes.
Surrogates yipped that Obama’s denigration of individual achievement wasn’t what it sounded like. But his inaugural address was more of the same. Charles Krauthammer calls the speech “an ode to collectivity,” with its stress not on voluntary associations but on coercive orchestration by the state. According to Obama, for example, “No single person can” do all the good things like build research labs and train teachers that we supposedly must do “as one people.”
Sounds like a glaring false alternative. David Boaz observes that “property rights, limited government and the rule of law”—under assault by Obama—are what we need to safeguard the voluntary cooperation critical to our progress and individual flourishing. I would add that we necessarily pay our own way as we engage in voluntary trade. We do “build that,” and so does the other guy.
Government can confine itself to protecting our rights in trade and otherwise leave us alone, or it can actively plunder our achievements. If the latter, we have less of what we built. Even though we did build that.
This is Common Sense. I’m Paul Jacob.
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Albert Gallatin
The whole of the Bill is a declaration of the right of the people at large or considered as individuals… It establishes some rights of the individual as unalienable and which consequently, no majority has a right to deprive them of.
When you make it harder to hire people—as Obamacare does by imposing penalties on companies that fail to provide specified health insurance—you make it more unlikely that persons will be hired.
Consider the case of Automation Systems Inc., reported at National Review Online. After the economy went into a nose dive a few years back, the only way owner Carl Schanstra could keep the company alive was by slashing staff.
Automation Systems has managed to bounce back, and business is improving. Currently, Schanstra employs 37 people. He would like to hire lots more. But as soon his company employs more than 50, he’ll be socked with $40,000 in penalties and $2,000 for each additional employee. Even firms that already provide health care to employees will have to pay such penalties if they have 50+ workers and their insurance plans don’t offer as much coverage as Obamacare deems necessary.
When you must shell out $40,000 to the government—$40,000 more than all hitherto expected payout of salary and benefits—to hire your very next employee, you have a strong incentive to keep your company smaller than you might have liked. And workarounds like contracting consultants, as discussed last week, are not options for every company.
This reality may seem obvious to anyone with even modest knowledge of what it takes to create wealth and make a living. But somehow the obvious escapes the central planners in Washington.
Or maybe they just don’t care about the hardships their policies impose upon us.
This is Common Sense. I’m Paul Jacob.
The aptly named decision Loving v. IRS—it’s so true, you know—provides a modest victory in the war of tax-takers versus everybody else.
The ruling, brought to our attention by the Institute for Justice, a party to the lawsuit, concerns IRS regulation of tax preparers. The IRS wants to force non-attorney, non-CPA tax preparers to take an exam, pay annual fees, and take hours of courses every year. District Judge James Boasberg has ruled the regs unlawful.
The regulations govern people hired by others. It would be really crazy if every non-credentialed taxpayer had to pass an exam, pay fees, and take courses every year just for the pleasure of filling out the forms we must complete in order to give IRS our money.
But the regulations are really crazy anyway. They violate the freedom of professional tax preparers. Also, by making it more expensive to be a tax preparer, they reduce the taxpayers’ tax-preparation choices and/or increase the costs of preparation services.
If judges regularly consulted such desiderata as our freedoms and rights when assessing assaults on them, many more regulations would be voided—say, 99.9 to 100 percent or thereabouts. Boasberg’s ruling hinges more narrowly on the important fact that Congress never gave IRS authority to regulate tax preparers.
The IRS has moved that the ruling be suspended pending its appeal. Let them lose the motion and lose the appeal, and I’ll be loving it.
This is Common Sense. I’m Paul Jacob.
The State of War is in absolute opposition to the right of free choice of nationality, of accession or secession.