Strengthening Constitutional Self-Government

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Presidency

Predictable Consequences and Progressive Policy

In the ongoing dust up over bank regulation, President Obama complains that GOP leaders are deploying a "cynical and deceptive assertion that reform would somehow enable future bailouts -- when he knows that it would do just the opposite."

As I read him, President Obama thinks that is it out of bounds to talk about bills in light of what unintended consequences they might have.  Assuming the President is acting in good faith, the goal of the bill is certainly to end such bailouts.  But if we have learned one thing about legislation over the years, it is that if often, perhaps always, has unintended consequences, often perverse ones.  And there are intelligent people of good will who think that the banking bill will, in fact, lead to more bailouts.  Perhaps they are wrong, but they, and those who think they may be right, are not merely being cynical.  By suggesting they are, the President is being needlessly divisive and petty.

Hence the only way to resolve this argument is to consider what the bill will, in fact do, and not what it is, in fact, designed to do.  In other words, we're dealing with plausible guesses.  But such humility about our ability to solve problems with legislation is bad for the political class, and for the people who get paid to support and write about them.

Categories > Presidency

Discussions - 5 Comments

It would appear that one source of this "cynical and deceptive assertion" is that well-known bastion of conservative thought, National Public Radio. The preferred solution of NPR's experts would appear to be breaking up the largest banks so they would literally not be "too big to fail." I think I would prefer that option to what Senator Dodd is proposing.

I would prefer breaking them up to the current bill. The Standard Oil model could apply. That would be better for the market economy than would the corporatist approach of the Dodd bill, which makes large corporations into something like utilities.

This is not to say, that I would not prefer a third approach.

I don't know, but it does look like the government is going to make a profit on this bailout.

As I understand it, TARP will probably, in the end, cost only a little money, relatively speaking. There's still the $50 billion invested in GM (as opposed to the other money which GM lent to GM, which has been repaid), and there's also still U.S. money invested in AIG. Outside of TARP, there's the $400 billion given to Fannie and Freddie.

As I understand it, TARP will probably, in the end, cost only a little money, relatively speaking. There's still the $50 billion invested in GM (as opposed to the other money which lent to GM, which has been repaid), and there's also still U.S. money invested in AIG. Outside of TARP, there's the $400 billion given to Fannie and Freddie.

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