Today, Treasury Secretary Geithner, and Federal Reserve Chairman Bernanke testified before a House of Representatives, Financial Services Committee hearing, called to investigate the AIG bonuses.
While several members used the hearings as yet another opportunity to perform for the cameras, expressing sanctimonious indignation, one member, Michelle Bachman of Minnesota asked questions that every member should have asked. At the bottom of this post is a five minute video of her exchanges with Geithner and Bernanke.
First, she asked if the government is “making an historic shift, jettisoning free market capitalism in favor of centralized government economic planning.” Secretary Geithner said not to worry, that the government was using authority Congress gave it.
Then Ms. Bachman focused on what should be the central question on the mind of every Congressman and Senator. At 48 seconds into the video she began to question Mr. Geithner on Constitutional authority:
REP BACHMAN: What provision in the Constitution can you point to, to give authority for the actions that have been taken by the Treasury Dept. since march of 08?
SECRETARY GEITHNER: oh…uh…well, the congress legislated, in The Emergency Economic Stabilization Act a range of very important new authorities…
REP BACHMAN: Sir, in the Constitution. What in the constitution could you point to, to give authority to the Treasury for the extraordinary actions that have been taken?
SECRETARY GEITHNER: Every action of the Treasury and the Federal Reserve and the FDIC has been using authority granted by this body, by this body, the congress
REP. BACHMAN: And in The Constituiton what could you point to?
SECRETARY GEITHNER: Under the laws of the land, of course.
That answer, “under the laws of the land” was truly lame, and unworthy of a fourth grader, let alone a senior government official. If the Constitution authorized the federal government to give or loan or invest money in private banks and insurance companies and other businesses, Secretary Geithner should have been able to cite the clause, where that authority appears. In fact, no such authority does appear, anywhere in the Constitution.
Representative Bachman deserves emails and letters of appreciation and thanks from all Americans for focusing attention on this qustion. Most of the actions of the Congress, the Treasury Depatrment, and the Federal Reserve since the Big Bailout began in September have been Unconstitutional.
Sadly, we live in a time when most politicians are either unfamiliar with the Constitution, or just don’t care what it says, unless of course they suffer personally from some action of government. But the Constitution was written to put restraints on government, to authorize it to perform just a few functions, and to leave all other functions to the states or to The People.
Representative Bachman then asked Chairman Bernanke the same question, regarding the Constitution. His answer, in part was:
The Congress has the right to authorize funds, which is what they did in The TARP program…
This answer is often given by those who wish to ignore the Constitution’s restraints on government. It’s true that the Congress is empowered to authorize funds, but only to pay for legitimate, Constitutionally authorized functions. Brenanke’s answer, implying that anything and everything is permitted by the Constitution, as long as the Congress authorizes the funds to pay for it, has been used to justify thousands of Unconstitutional government programs, regulations, and restrictions on liberty.
The Constitution does specifically provide government with the means to deal with companies that become insolvent and cannot meet their obligations: Bankruptcy Court. That’s where AIG, Citibank, Bank of America, General Motors, Chrysler, and a several Wall Street firms should be today. In bankruptcy court a company like AIG is dismantled, the parts that are valuable are sold to third parties and the proceeds are used to repay as much of the debts and obligations as possible. It’s a brutal process and reditors and investors usually end up with less than 10% of what they are owed. But the pain is limited to those who, by their own choice, were directly involved.
The Bottom Line
Both the Bush and Obama Administrations have chosen to ignore and violate the Constitution. They have borrowed enormous sums in the name of the taxpayers in order to save companies and financial institutions that became insolvent, from the Constitutionally provided process of bankruptcy. The cost to the taxpayer is likely to exceed Two Trillion Dollars. The Federal Reserve is printing Trillions of new Dollars. This will eventually bring on a round of inflation, diminishing the value of the savings, pensions and life insurance. It’s time for The People to rise up and protest, to demand that their elected representatives and their government obey the Constitution.