Tuesday, October 14, 2008

Has the Federal Government Lost Its Legitimacy?

Yesterday at a campaign rally here in Virginia Beach, Gov. Sarah Palin stated the following: "There's anger about the insider dealing of lobbyists. Anger about the greed on Wall Street. Anger about the arrogance of the Washington elite." Indeed, there is anger, righteous anger, and it is because Washington is no longer devoted to the public good; it is dedicated to self-promotion and self-preservation, and therefore has lost its claim to legitimacy.

Throwing an accusation at "Washington" is, of course, similar to using a hydrogen bomb when a cruise missile is much more appropriate. Let me, therefore, be more specific. Those congressmen who voted for the "Bail Out Bill," particularly after it was "porked up," have threatened the continued legitimacy of the federal government.

Congress' powers are specified in Article I of the Constitution. Article I contains no specific power granting to Congress the authority to loan money to failing investment houses, or to invest in the stocks of creaking banks, or to buy securities composed of sub-prime mortgages given to poor credit risks. There is no authority granted to Congress in Article I to authorize bankruptcy judges to reduce interest rates on some mortgages, or to reduce principal on others.

The best constitutional "hook" for the Bail Out monstrosity is the first sentence in Section 8 of Article I, which permits Congress to collect taxes and provide for the "general welfare of the United States." Note that Congress is not authorized to provide for just the "welfare" of the United States, but it is specifically limited to acts on behalf of the general welfare. This means, of course, that Congress is not empowered to benefit special interests, but must look to the general welfare of the republic.

Not all financial institutions are failing, and the overwhelming majority of mortgages are being paid on time. Only a few banks and investment houses are failing, and these generally are the ones who through mismanagement made money on the subprime mortgages and are now facing the consequences of their mismanagement. The Bail Out benefits these special investment houses and those borrowers who through greed or sheer stupidity borrowed money when they should not. Benefiting the greedy and dumb, while giving no incentives to the frugal and wise, is not only unconstitutional, it is terrible public policy.

The Bail Out Bill was first defeated in the House of Representatives before being considered in the Senate where pork was added to the pot. The Bill after passing the Senate was then returned to the House where enough members apparently liked the more pork laden "stew" to vote for it. The following tax breaks were in the final bill when passed by the House:

  • $223 million for Alaskan fisherman;
  • $192 million for rum producers in the Virgin Islands and Puerto Rico;
  • $148 million for wool-producing companies;
  • $128 million for manufacturers of car-racing tracks;
  • $10 million for small television and film producers.


How can $192 million for rum producers in the Virgin Islands and Puerto be in the general interests of the United States as required by the Constitution? How can this be equitable without tax breaks for our fine manufacturers of Kentucky Bourbon or Tennessee Mash? How about the producers of gin and vodka, let alone the California wine interests? Why should Alaskan fishermen get a tax break when Washington State fishermen who fish in the same waters do not similarly benefit? Should not cotton-producing companies have the same tax break as wool-producing companies? How can a tax break for manufacturers of car-racing tracks ever be in the general interests of the United States?

Governor Palin's running mate, who purportedly champions the crusade against pork spending, voted in favor of the pork-laden Bail Out Bill. So did his opponent. Both of these self-proclaimed "agents of change" are, therefore, deceptive at best. These presidential candidates and Senator Biden are members of the Washington elite about which people are angry according to Gov. Palin. Senators McCain, Obama, and Biden have demonstrated through their Bail Out Bill vote and their other votes on spending bills that they will continue to favor special interests rather than the general welfare of the nation. Their actions as President, therefore, will continue to threaten the legitimacy of the federal government. Congress, with its justly deserved approval rating of nine percent, will be gleeful accomplices. God help us all.