Strengthening Constitutional Self-Government

No Left Turns

Look Before You Leap . . .

That is the message of Heritage’s latest paper, which shines light on grave constitutional issues arising from the proposed bailout. In explaining the separation of powers defects that run amok in the proposed legislation, messengers Gaziano and Grossman argue that we should not seek to narrowly escape the requirements of the Constitution, which promote the liberty and free market principles necessary to see us through even these troubled times:

Some would treat the Constitution as a legalistic document and employ narrow legalistic arguments to circumvent its strictures and protections. The substance of this debate, however, should not turn on what provisions might or might not pass muster with the courts under a pinched conception of our fundamental law. Rather, it is the principles the Constitution embodies, which have served us well through so many crises, that should be the focus of debate. In short, Americans should take little comfort that legislation might barely pass muster in the courts if the legislation does serious damage to the underlying constitutional principles that were designed to protect our individual rights against governmental usurpations.

Read it all, with a cup of good, free-market coffee.

Discussions - 6 Comments

Too late. The bailout needs to happen and fast. It will be finished by Sunday night, guaranteed. The Fed froze the markets b/c no one knows how to invest and no private money will move until the government decides where its throwing $700 billion. The bailout might be stupid, but at this point, delay will be even worse.

Re: Folsom

Sorry for not getting to the Folsom article about how this isn't a Great Depression until now. Just sat through a lunch with a business professor who explained the numerous problems with the bailout(s).

Folsom's hope that this isn't the Great Depression may be quite misplaced. Some kind of bailout is needed, and needed fast to stop a serious depression. Paulson began talking about the $700 billion bailout not because of the money market. After AIG, people realized that money market accounts which invest in short term commercial paper (short term loans) were invested in Mortgage Backed Securities (the so-called toxic securities). Commercial paper (Money Market accounts the private individuals have at banks) has always been considered a cash equivalent. Suddenly, everyone realized that these "safe" accounts might be worth less than face.

By Tuesday, all the big players were out of the money market/commercial paper stuff. The problem is that almost every business uses commercial paper to finance operating expenses. Most companies need loans to meet payroll, and buy supplies at certain points. This cash all disappeared this week. OH SH*T. If this is allowed to happen, we're not just talking about investors getting burned, we'd be talking about mass layoffs. Hence Paulson's sudden plan to buy up these worthless mortgage based securities and get them out of the private economy so the capital market can move again.

Between the money market and the anticipation of a bailout, the whole financial sector is frozen. If a bailout doesn't unfreeze this mess, then yes, there will be millions of lay-offs b/c companies won't be able to continue financing their operations.

Robert WHO? Wait. . . this name sounds vaguely familiar. Alt? Alt? Yes, I DO recall this name.

Welcome back to NLT, dude!

Something tells me that this is the first time since GWB first took the White House that Heritage has detected any "grave constitutional issues" to address, which is of course pretty laughable.

I thought the article was very good. It is ironic that these issues are ignored as it seems the "deal" will go through at the crisis pace. Almost as ironic as the fact that Paulson, who was CEO of Goldman Sachs from 1998 to 2006, is the one coming up with the solution. If he can come up with this now so quick why was he one of the major players in the creation of the crisis?

Sorry Cubs fan, but I seriously doubt that this is the first time they have disagreed with W. But hey, why bother we facts when you can write something snarky instead?

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