The Big Three and TARP: What Happened to Democracy?

What’s happened to democracy? GM and Chrysler say they desperately need money to avoid bankruptcy in the next few weeks. Treasury Secretary Hank Paulson now says the Big Three “will get the money as quickly as we can prudently do it.”

But didn’t Congress just vote down that money?

Don’t get me wrong. I’m among those who think there’s good reason to give the automakers a $14 billion bridge loan to stave off immediate bankruptcy until they come up with a restructuring plan (although, as I’ve said before, the plan ought to demand real sacrifices from every stakeholder). But I have to tell you, I’m deeply troubled by the administration’s likely decision to give it to them when last week Congress said they can’t have it.

Call me old-fashioned but I believe in the democratic process. Under our Constitution, Congress is in charge of appropriating taxpayer money. If Congress explicitly decides not to appropriate it for a certain purpose, where does the White House get the right to do so anyway by pulling the money out of another bag?

That other bag, by the way – called the Troubled Assets Relief Program, or TARP for short – was enacted to rescue Wall Street, not the automobile industry. Personally, I think there’s more reason to rescue big automakers than big Wall Street banks, but what I want isn’t the issue. It’s what our representatives voted for. When they voted for TARP, at the start of October, they didn’t say to the President: Here’s a $700 billion slush fund to use as you wish. They said: Here’s $700 billion for Wall Street.

If TARP is a slush fund, everything’s arbitrary. We’re no longer a nation of laws; we’re a nation of Treasury and White House officials with hundreds of billions of dollars of taxpayer money to dispense as they see fit. Why rescue autos and not, say, the newspaper industry, which is heading for oblivion. Better yet, why not rescue state and local governments? They’re running short about $100 billion this year and as a result are slashing public services, including the nation’s schools.

Even as it is, TARP is shrouded in secrecy. The Treasury has burned through $335 billion so far, and no one knows exactly how or by what criteria. Why, for example, did it set tough conditions on AIG while giving Citigroup the sweetest deal imaginable?

The dictionary meaning of a “tarp” is something used to cover things up, which is exactly we’ve got.

But our system of government depends on sunlight, transparency, and public awareness. It also depends on Congress exercising its constitutional duty to make laws and the President executing them.

An economic crisis is no excuse for turning our back on democracy.


Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.

8 Responses to "The Big Three and TARP: What Happened to Democracy?"

  1. Alan Reynolds   December 18, 2008 at 10:05 am

    Bravo! We now have two budgets, one run by Congress and the other by the whim of unelected Executive branch autocrats.Congress must regain the power of the purse ASAP by abolishing TARP.Then they need to work on getting the money back — much of which was forced on big banks, making taxpayers involuntary shareholders while crowding out private capital through dilution and political risk.

  2. Anonymous   December 18, 2008 at 11:40 am

    TARPI grew up as a Boy Scout and a tarp was my best friend in case it rained. Too bad it has been used as an acronym for bullsh.

  3. devils advocate   December 18, 2008 at 3:55 pm

    yours is a lone voice which I applaud

  4. Mark   December 18, 2008 at 6:07 pm

    TARP is nothing compared to what the Fed is doing on its own without a shred of oversight or transparency. 2 trillion dollars or more has been farmed out to unknown institutions in the U.S. in exchange for collateral of dubious quality that is not available for public scrutiny. Taxpayer’s dollars, on an enormous scale, are being spent without the approval of any one of the three branches of government! This is not democratic in any way, shape or form.

  5. Guest   December 18, 2008 at 8:27 pm

    Congress has long ago given up its power to declare war. No they have given up the power of the purse.

  6. Anonymous   December 20, 2008 at 3:19 am

    This is just another reason why we need to stand up as one and declare that we will no longer stand for this sh*t. The liberties the Bush white house has taken with our Constitution are calamitous.

  7. Peter Schaeffer   December 26, 2008 at 8:35 pm

    Kudos

  8. Leonard Rutland, Jr.   December 27, 2008 at 5:55 am

    Pure democracy is a lynch mob. What the mob wants is not by definition good, fair or best in the long run.Many praise pure democracy only when it runs in their favor. Recall the Congressman who told the media that telephone calls being received by his office prior to the vote on the $700 billion dollar bailout were running 50-50…”50% no and 50% hell no”. What happened to democracy then? Fat cats win and the rest of us pay.We had a Republic but it seems to be slipping away. We over-mortgaged ourselves and now we are passing the check to our children and grandchildren. Shame on us!