In Praise of the Blank Check
There's a bit of discussion now on if the whole financial bailout "worked." For all the progressive polarization around whether the bill should have been passed in its original form, the division between those in favor (say myself or Kevin Drum) or those opposed, like Dean Baker or my colleague David Sirota, were often more tactical than ideological, meaning some folks thought it was the best deal to be gotten right then and others thinking defeat would lead to a better deal.
But here's the thing-- given the craziness of challenges coming, a general blank check for the executive branch was probably the best course. The rightwing filibustering of the auto bailout is a good example of the problem. In the best of times, the filibuster is an anti-democratic monstrosity that retards progressive change. In times of economic crisis, it is literally a tool for rightwing minorities to use blackmail to assert corporate demands as the price for avoiding chaos and destruction.
At such times, a blank check for the Presidency is more reflexive of the democratic willthan a "deliberative process" that empowers minority interests to use the filibuster as a weapon of blackmail. Scarily, even a President like Bush is more reflective of the democratic process than that rightwing minority in such a crisis period.
And as we see rightwing Senators continue to try to use the filibuster to impede Obama, we will no doubt see many progressives previously bemoaning the imperial Presidency finding executive action to have a whole new positive light.
Now, the better solution would be to abolish the filibuster altogether (and even more ideally, the unequal representation in the Senate) and have a fully functioning democratic representative branch, which in turn could democratically constrain the President's executive power. But since that's unlikely, there will never be a stable place in our system where "restraining executive power" doesn't de facto mean "empowering minority special interests to block needed reforms." It is the history of political sloth by the Congressional branch of government that has always given executive power its glamour and democratic constituency. The filibuster and ever extending executive power have ended up reinforcing each other over the years.
Every Big Three autoworker, auto supplier, or community that depends on them have just switched their allegiance to unfettered executive power in the wake of the Senate auto bailout filibuster and the subsequent rescue of the industry by the executive branch. This dynamic has been repeated year after year in different aspects of policy, with loyalties switching back and forth.
Me, I'm a political realist-- I fight on the issue, not abstract principles like "curbing executive power" since our Senate is so undemocratic that there is hardly any democratic justification for Congressional supremacy.
What is striking to me is that eliminating the filibuster is not the top demand of progressives committed to democracy in our country. Nothing would restore greater democratic accountability to Congress, which in turn would restore it the legitimacy to demand greater democratic accountability from the President.
Long story short.
Where's GEORGIVS·III·REX· when you need him.
December 22, 2008 1:44 PM | Reply | Permalink
You know Nathan, some of us opposed the Wall St. and Detroit bailouts on moral grounds. These bailouts enrich the very people who caused the problems. Wall St. took our money and paid used it to fund bonuses for its own executives. When it came time for a Detroit bailout you said "stand with the workers." Not if it means standing with Bob Nardelli.
The president didn't stand up for the popular will when he decided to make TARP funds available to the Big Three. Indeed, the auto bailout was not popular, look at the polls. Somebody should bring a court challenge to the president's plan. That TARP money was never meant to go to industrial companies.
What Bush did was incredibly cynical (as always). He defied congress so that he could transfer tax payer money to Cerberus Capital, who used Dan Quayle as its lobbyist to get the deal done.
Nathan, you of all people should be outraged at Bush over this. He's given our money to a freaking private equity fund and we get nothing in return. Heck, the auto companies are still even suing California!
December 22, 2008 1:56 PM | Reply | Permalink
Bankruptcy courts usually do the same thing-- at the expense of the workers even more directly. When the whole labor movement is on the side of the bailout, and Trent Lott, Corker and McConnell are leading the charge against help, it's pretty clear that those in the immediate labor knifefight know which side is which.
But the question is why should a handful of rightwing Senators be able to block a bill supported by the majority of Congress? You really think they are the guardians of the public against the labor movement pushing to save jobs?
And none of this money is made as gifts-- the money gets repaid if the companies survive. The federal government actually made $350 million off the original Chrysler bailout. This whole idea that TARP money is just being "given away" is part of the problem with the whole debate. I sure wish the federal government was demanding a better deal for taxpayers and greater corporate accountability for the money given, but these are loans and warrant and other equity positions in almost all cases.
December 22, 2008 2:17 PM | Reply | Permalink
I don't trust the motivations of the Republican senators, no. But the fact is, most Americans didn't support an auto bailout with either TARP funds or other funds. The Big Three execs tried and failed to convince the public.
As for whether or not the funds are being given away -- I think that in a sense they are. The loans made to GM and Chrysler are callable if they don't come up with plans towards profitability. But that's not much protection. The money will be spent. We can call the loan all we want and it won't do any good if, say, GM doesn't have the money. We stand to lose our shirts. And yes, the auto loans are small compared to TARP but there are still better uses for those billions.
Anyway, don't mean to be disagreeable with you. I'm a fan. But this one makes me angry.
December 22, 2008 2:48 PM | Reply | Permalink
Disagreeing is not being disagreeable; my point is actually that a lot of the progressive disagreements on the bailouts are less about principle than about tactics and different assessments of likely outcomes. For all the idiocy of how the Big Three have managed themselves, I think they have a mass of valuable human and physical assets that have been devalued to a ridiculously low level because of the fears of short-term dangers. If the government backstops them, I'm pretty confident they'll recover well and the taxpayers will get their money back and probably more. That's a bet on outcomes and it's reasonable to disagree on it, although I'll give the benefit of the doubt to millions of workers fighting for their livelihoods for a last chance.
December 22, 2008 3:43 PM | Reply | Permalink
Well, I'll give you that -- my loathing for Nardelli aside, it's good that the workers get a chance to pull this off. As for the government making money, I guess it's possible. I think it would help if, as with Chrysler, the bond holders would take a haircut. That really helped clear the way for Chrysler.
Happy holidays, Nathan.
December 22, 2008 4:09 PM | Reply | Permalink
Nathan,
at the risk of seeming to be picky let me say; we didn't give hundreds of billions to "Wall Street" or "Corporations", we gave it to the executives in the boardrooms.
We have to start personalizing the interaction between the Government and entities like "Wall Street" or "AIG" etc. by zeroing in on the 'people' who are running these entities.
Terms and words like Wall Street, Corporations, Banks, etc. are abstract words that I think most of the public rarely connects to the people that run these entities.
AIG didn't rip the public off, the executives at AIG did.
OK, that's the end of my rant.
December 23, 2008 9:25 AM | Reply | Permalink
I actually don't buy this is about individual corporate executive greed. Yes, that was part of it, but the reality was that much of the harm was done by eminently intelligent people who believed in their hearts that unfettered, unregulated markets would create the greatest wealth for the greatest number of people. Yes, they believed they would themselves get and deserve a disproportionate share of the wealth generated, but a lot of people backed them in that belief, economically and politically.
This was a failure not of a few bad apples but of an ideology and an economic system. So yes, it is "Wall Street" and "corporations" as abstract components of an ideology-driven economic system that failed, not just a few bad individuals.
Yes, we should punish the bad apples but they were just doing what they were empowered to do by a failed economic system. If we pretend the problem was an ethical failure, then many in the business community will say-- tssk, tssk, good we shuffled those bad actors off the stage, but no fundamental reforms are needed, just more responsible businesspeople. No, what we need is not more ethical business leaders but a fundamentally different system of managing businesses in our economy.
December 23, 2008 10:10 AM | Reply | Permalink
Eliminate the filibuster?
I see your reasoning, but completely disagree with this idea. A Democracy is more than just majority rule. The filibuster is one of a few critical checks against the power of majorities in the Constitution. Eliminating the filibuster sounds all well and good when it you are in the majority, facing an obstructionist filibuster. The idea loses its luster, however, when the will of the majority conflicts with your "democratic" ideals.
Also totally disagree that the blank check was the best idea....Are you freaking kidding? Have you seen the AP article where they asked the recipients of TARP funds, our money, what they were doing with it. Not one gave a straight answer.
Yeah, swell idea.
December 22, 2008 2:20 PM | Reply | Permalink
THe filibuster isn't in the Constitution. THe check on majorities was supposed to be two separate chambers that would independently agree to the same bill, plus a Presidential veto. So on top of those Constitutional checks, we add this extraconstitutional filibuster that gives tiny minorities that ability to impede change, as they did with civil rights, economic rights, and social rights for all of American history. We would long have had national health care without the filibuster-- every child that dies because they lacked health care is a monument/tombstone to the beauty of counter-majoritarianism.
December 22, 2008 2:41 PM | Reply | Permalink
we don't need to get rid of the filibuster. we just need to get rid of the practice of letting the threat of filibuster count as if it were the same as an actual filibuster. forcing an actual filibuster puts the risk more squarely where it belongs, on the side that is obstructing the majority. as it stands there has been no downside to obstruction by threatening to filibuster.
December 23, 2008 2:43 PM | Reply | Permalink
fkaZ,
exactly, and that goes for the threat of a veto, and this is why I don't like Harry Reid as Leader.
Make the Republicans filibuster and make Bush veto, if you don't, then the public rarely gets to know what you tried to do, and this is why Republicans and their supporters can babble that the Democrats are doing nothing.
December 23, 2008 3:01 PM | Reply | Permalink
The problem with the senate is that the empty states have too much power. 16% of the population controls 50% of the votes.
What this means in practice is that rural and farm issues get precedence over urban and industrial needs. The breakdown between red/blue can be seen by the continued existence of a rural block, whether it is Dixiecrats or blue dogs or whatever. The party affiliation may change but the adherence to regional demands remains.
Getting rid of the filibuster won't fix this.
Notice the blatant support for foreign, southern-based, car makers by GOP senators. Fifty years ago they would have been Democrats and still opposing the rights of organized labor.
I don't have a fix, but giving more electoral strength to the people in terms of things like organized labor can at least be a partial remedy.
December 22, 2008 2:31 PM | Reply | Permalink
Silly you condemning the Senate for being un- or anti- democratic. One could say its whole purpose is to be just that as a balance against the House -- it's a Republic already!
The problem of the filibuster is that the THREAT of filibuster has been used too often by the, in my view, wrong people, and not enough by the right people.
As for blank checks... there's no question that deliberation is slower than reflex. But there can be a good middle way, a check with constraints.
December 22, 2008 2:32 PM | Reply | Permalink
But my point is that people like myself, who would generally support accountability, recognize that the filibuster makes amendments to rules passed by Congress so impossible that blank checks to the executive branch are the better alternative.
I don't want blank checks but if the option is a blank check or a check whose conditions can only be modified with the permission of Trent Lott, I'll support the blank check.
December 22, 2008 2:43 PM | Reply | Permalink
And I'm saying that you have created a false dichotomy, it isn't "either A or B".
As to whether TARP is better than no TARP, I think that's still up for discussion re the banks, and of course GM had the Chapter 11 option.
I am in favor of some constrained spending, but Congress is what spends the money, officially.
December 22, 2008 6:33 PM | Reply | Permalink
And the problem is further that the threat of a filibuster is allowed to suffice. I say, if we are going to keep that tool, it is not a filibuster unless it is an ACTUAL filibuster--people have to talk continuously to sustain it. And that way the machinations of it all would be crystal clear to everyone, whether or not the MSM wanted to mention it.
December 22, 2008 6:43 PM | Reply | Permalink
Yes.
December 23, 2008 12:34 AM | Reply | Permalink
I would love to see a real live filibuster where Republicans are forced to physically occupy the chamber for 4 days and talk until their creaky old throats and bladders give out. That would be great theater and either expose the stalling tactic for what it is, or provoke an actual debate about a real issue.
Instead, they've dumbed it down into a shadowy virtual filibuster where the minority leader just says you don't have the votes and the issue is tabled, while the media portray obstructionism as a legitimate hurdle you just failed to clear. That system ought to be abolished pronto.
December 22, 2008 6:22 PM | Reply | Permalink
expose the stalling tactic for what it is
Yes--let the bastards shut the whole country's business down while they read from the phone book...That's the real flip side of the filibuster--you have to keep the debate going, or you have to vote on the bill.
There's not supposed to be a third option "The punks in the majority roll over and pretend that the bill in question can't pass"
December 22, 2008 6:49 PM | Reply | Permalink
And why do they act like punks? A. Cowardly, B. Corrupted, or C. Complicit?
December 26, 2008 4:30 AM | Reply | Permalink
And why do they act like punks?
D.:NOMINATIONS FOR THE FIRST ANNUAL "FORTNEY " AWARD
December 26, 2008 11:32 PM | Reply | Permalink
Good point. If we're going to keep fillibutering, do it for four days and follow the rules.
December 23, 2008 12:23 AM | Reply | Permalink
Nathan -- This is one of the best "Comment" sections I've ever read in TPM, because you're the only one that replies!
I wish more (or any other) bloggers on this site would actually reply to comments. Makes for truly interesting dialogues. You're continued discussion on this topic has caussed me to rethink the bailout "debate.".
Good work! Keep it up!
December 23, 2008 12:22 AM | Reply | Permalink