Last September, Treasury Secretary Henry Paulson testified to the Senate that TARP money was necessary for ailing "financial institutions." Nowhere in the bill's 169 pages was there any reference to government funding of "automobile" or "manufacturing" companies. In November, Paulson told a House committee: "I've said to you very clearly that I believe that the auto companies fall outside of (TARP's) purpose." Then advocates of a Detroit bailout proposed legislation to authorize that. It failed. So President Bush's Treasury Department gave an "interpretation" of the law that ignored the unambiguous terms of the pertinent legislation, the history of its enactment and Treasury's own prior interpretations of it.
Controversy about the judiciary's proper role is again at a boil because of a Supreme Court vacancy, and conservatives are warning against "judicial activism." But the Chrysler and GM bailouts and bankruptcies are reasons for conservatives to rethink the usefulness of that phrase and to make some distinctions.
Of course courts should not make policy or invent rights not stipulated or implied by statutes or the Constitution's text. But courts have no nobler function than that of actively defending property, contracts and other bulwarks of freedom against depredations by government, including by popularly elected, and popular, officials. Regarding Chrysler and GM, the executive branch is exercising powers it does not have under any statute or constitutional provision. At moments such as this, deference to the political branches constitutes dereliction of judicial duty.
"At present," notes the Economist, "there's enough capacity globally to make 90 million vehicles a year, but demand is little more than 60 million (BEG ITAL)in good economic times(END ITAL)" (emphasis added). Unfortunately, says Reason magazine's Jacob Sullum, America's president "can imagine a world in which the internal combustion engine is obsolete but not one in which GM is." So, doubling down on his predecessor's misbegotten policy, the president is acting strenuously to perpetuate some of America's portion of the excess capacity.
A bemused Paulson, who was present at the creation of Bailout Nation with TARP funds, said while still in office: "Even if you don't have the authorities -- and frankly I didn't have the authorities for anything -- if you take charge, people will follow." This would not be happening were Congress awake, or were the courts properly active. Constitutionalists are not amused.