Summary: A crisis like we have today tests both out system of government and America’s values. How is our Constitutional regime doing? Not so well, taking more hits to its already weak superstructure. Not that many in America care, as we still have cable to watch as our Republic slowly fades away.
Systemic failure manifests itself in the weakest part of a machine. Today that weak part of our political engine is Congress. The history of English democracy rose with power of Parliament. American democracy may die with the power of Congress. Power flows year by year to the Imperial Presidency, a trend obvious since the early 1960’s.
But be chipper, legislative power is so yesterday. Fast, dynamic Executive Leadership is 21st century America — a government fit for consumers. For peons.
“Lawmakers Left On the Sidelines As Fed, Treasury Take Swift Action“, Washington Post, 18 September 2008 — Excerpt:
The frenetic pace of the financial crisis has forced the Treasury Department and Federal Reserve to make rapid-fire decisions in recent days, leaving Capitol Hill lawmakers effectively impotent — and frustrated. … Congressional leaders learned of the rescue late Tuesday during a hastily called meeting in the Capitol with Bernanke and Treasury Secretary Henry M. Paulson Jr., who explained the deal after it was done.
“Congressional Irrelevance“, Todd Zywicki, posted at The Volokh Conspiracy (an A-team law blog), 18 September 2008 — Excerpt:
One interesting aspect of the recent government bailouts has been the complete irrelevance of Congress. The operation and decision-making seems to be run almost entirely by the Secretary of Treasury and Federal Reserve. Congress appears to lack the ability, the will, and the decisiveness to play any role except spectator, as a handful of senior executive branch officials have nationalized major portions of Wall Street.
What is further interesting is that Congress is not missed in the slightest. No one is clamoring for a greater role for our elected representatives in dealing with these problems. I haven’t heard anyone saying, “We really need to get Congress more involved in this. They’ll know what to do.”
The other day, I offered my view that Congress today is fundamentally a silly place stocked with silly people. This latest situation illustrates the principle. I don’t know whether Paulson and Bernanke are doing the right thing (I tend to think not). But I know for certain that I’d rather that they be making these decisions than Congress.
Moreover, this problem has become systemic. A recent Wall Street Journal article noted that the current Congress has enacted less legislation than any Congress in recent history–and that includes its many symbolic pieces of legislation such as renaming Post Offices. The output of administrative agencies dwarfs that of Congress. The Senate’s behavior on judicial nominations is preposterous.
I sense a vicious cycle at work here. As Congress has become more dysfunctional and unable to address matters of public importance, the Executive Branch has stepped in to fill the gap. In turn, this allows Congress to behave in an even less-serious manner, which in turn necessitates further action by the Executive Branch. If the Executive waited for Congress to do anything, nothing would get done. So Congress essentially spends its time bloviating and posturing, while the unelected beavers in the bowels of the bureaucracy crank out federal regulations.
Put more generally, Congress’s ridiculousness has increasingly caused it to forfeit its status a co-equal branch of government. 40 or 50 years ago it might have been plausible to imagine Congress addressing important public policy issues like entitlement reform or health care reform (I’m not saying they would have done it, but it seems like it was more plausible then). Serious people were in the Senate then — Taft, Johnson, etc. Today, however, the idea that serious solutions to pressing social problems might originate in Congress is hard to suggest with a straight face.
As obvious as all this is, even bright reporters seem to find this difficult to clearly see.
“Market Law“, Ezra Klein, blog of The American Prospect, 17 September 2008 — Excerpt:
The AIG bailout — in fact, all of the bailouts — have been conceived entirely without their involvement. Indeed, the Federal Reserve and the Treasury Department have been acting, over the course of this crisis, as if they are the sum total of the government. And that may be the correct approach: Neither the president nor the legislative branch possess the expertise or speed to be involved in the real-time crisis management that Bernanke and Paulson are trying to manage. They could, presumably, reverse decisions after the fact or change the contours of the law, but for now, the ship is being steered by the Chairman of the Federal Reserve, the Treasury Secretary, and an informal working group of Wall Street CEOs and banking powerhouses. And the government, as we normally think of it, has basically accepted their temporary authority.
You’ve heard of martial law? We’re currently in a state of market law.
This is painfully wrong. The massive interventions of the government into the finance industry are the opposite of free market dynamics.
The foundation of a democracy is its people. We must insist that our leaders follow the forms of government set forth in the government. However pressing the need to watch the latest sitcom or game on cable, there is nobody else who should or will do this.
We have to elect serious people to Congress, demand performance beyond acting as overpaid ombudsmen, and insist that the exercise the power of their office. Not just hold hearings after major events to play 100% hindsight pomus judges.
We have an election in November to start the process. And some emails to your Congressman demanding involvement in the financial crisis might help.
Please, do not bother posting comments whining that it is all too difficult, that cowardliness and despair are the only rational responses to our helplessness. Instead use the time to read a biography of Franklin, Jefferson, Washington, Adams, Jackson, or Lincoln. That might remind you of what is possible and stiffen your spine.
Please share your comments by posting below. Please make them brief (250 words max), civil, and relevant to this post. Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).
Key Treasury Department documents
We cannot plead the “we didn’t know the details in the fine print” excuse. The important details about this massive nationalization have been clearly spelled out for us. See this page for a current list of Treasury Department documents.
Some FM posts about the current crisis
Treasury Secretary Paulson leads us across the Rubicon, 9 September 2008
High priority report: a geopolitical sitrep on the financial crisis, 15 September 2008
Say good-bye to the old America. Welcome to our new socialist paradise!, 17 September 2008
Another voice warning about the nationalization of AIG, 18 September 2008
A vital but widely misunderstood aspect of our financial crisis, 18 September 2008
A new sitrep, as we move into phase 3 of the financial crisis, 19 September 2008
Another step away from our Constitutional system, with applause, 19 September 2008
What do we know about the financial crisis? What are the key questions?, 20 September 2008
Slowly a few voices are raised about the pending theft of taxpayer money, 21 September 2008
America appoints a Magister Populi to deal with the financial crisis, 21 September 2008
Legal experts discuss if the Paulson Plan is legal, 21 September 2008
For a full listing see the FM reference page about the Financial crisis – what’s happening? how will this end?.
A few of the most important posts warning about this crisis
This crisis has long been forecast by many, including in articles on this site. Even now that we are in the whirlwind, these provide valuable background material on its causes — and speculation about the results. Here are some of those posts.
A brief note on the US Dollar. Is this like August 1914?, 8 November 2007 — How the current situation is as unstable financially as was Europe geopolitically in early 1914.
The post-WWII geopolitical regime is dying. Chapter One, 21 November 2007 — Why the current geopolitical order is unstable, describing the policy choices that brought us here.
We have been warned. Death of the post-WWII geopolitical regime, Chapter II, 28 November 2007 — A long list of the warnings we have ignored, from individual experts and major financial institutions (links included).
Death of the post-WWII geopolitical regime, III – death by debt, 8 January 2008 – Origins of the long economic expansion from 1982 to 2006; why the down cycle will be so severe.
Geopolitical implications of the current economic downturn, 24 January 2008, – How will this recession end? With re-balancing of the global economy, so that the US goods and services are again competitive. No more trade deficit, and we can pay out debts.
- A happy ending to the current economic recession, 12 February 2008 – The political actions which might end this downturn, and their long-term implications.
- What will America look like after this recession?, 18 March 208 — The recession might change so many things, from the distribution of wealth within the US to the ranking of global powers.
The most important story in this week’s newspapers , 22 May 2008 — How solvent is the US government? They report the facts to us every year.
The World’s biggest mess, 22 August 2008 — A brillant ex pat looks at America from across the ocean.
“The changing balance of global financial power”, by Brad Setser, 22 August 2008
“The Coming US Consumption Bust”, by Nouriel Roubini, 6 September 2008
To see the all posts on this subject, go to the FM reference page about The End of the Post-WWII Geopolitical Regime.