Obama, GM and Silly Psuedo-Constitutional Arguments

Posted by Joshua Holland, AlterNet at 10:06 AM on June 14, 2009.

There's much to criticize in the government bail-outs of GM and Chrysler.

But WaPo editorial writer Charles Lane doesn’t worry about the fact that we’ve allowed companies deemed “too big to fail” to proliferate — firms that can be mismanaged into the ground and have every expectation of a tax-payer bailout. He doesn’t worry about the moral hazard inherent in that kind of state-supported capitalism -- of shifting risk from private investors to the American tax-payer -- or the fact that we'll subsidize Detroit auto-makers as they offshore scads of good manufacturing jobs.

Instead, he examines a conservative talking-point about the Mad Megalomania of Barack Obama and, in doing so, gives it weight and legitimacy it doesn't appear to merit.

Let’s take a look:

Nationalizing General Motors, and part of Chrysler, may or may not turn out to be a good deal for the taxpayers. I have a different concern, though: Was it constitutional?

With hundreds of thousands of jobs on the line, this may seem a churlish question. Then again, the temptation to bend the rules of democracy is always greatest in a crisis. It wasn't so long ago that a president claimed the power to do all sorts of questionable things -- from waterboarding to electronic surveillance -- because the country faced a crisis.  

Watch the writer’s trick: first draw a ridiculously false equivalence, and then assert that you’re not really saying what it seems you’re saying:

Bailing out Detroit is not in the same category, morally, as torture.

Good to know.

Still, a presidential decision to federalize a vast sector of the U.S. economy affects the country's vital interests and, potentially, the rights of its citizens. Such an extraordinary measure should rest on the firmest possible foundation of democratic legitimacy. Does President Obama's rescue of GM and Chrysler meet the test?

Lane then offers another dubious analog:

The classic statement on such matters comes from Supreme Court Justice Robert H. Jackson's opinion in a case about another crisis-driven assertion of executive power: President Harry S. Truman's seizure of steel mills in 1952. Truman wanted to prevent a strike during the Korean War; the court blocked him.

Truman nationalized the steel mills to break a strike over wage controls.  The U.S. steel industry was profitable. GM and Chrysler were going belly-up, and the government intervened to save hundreds of thousands of jobs.

The two scenarios are hardly comparable, but as far as the law goes it could be an apt comparison.

Only it’s not, and here Lane offers a lesson in reinforcing a false controversy.

First, the law:

In Jackson's analysis, the president's power is at its "maximum" when he "acts pursuant to an express or implied authorization of Congress." The Obama administration argues that it has such authority today, under the Emergency Economic Stabilization Act of Oct. 3, 2008.

The only problem is that the law doesn't give "express" authority to buy a car company.

But does it give “implied” authorization?

At the time Congress approved TARP -- grudgingly -- everyone assumed it was to buy up Wall Street's toxic mortgage-backed securities, which are the only class of assets named in the law. (The law did contemplate other, unspecified asset purchases.)

Everyone assumed it was to buy toxic securities (I should note that we didn’t so assume), but you know what happens when one assumes. And the law, concedes Lane, “did contemplate other, unspecified asset purchases.”

What about "implicit" authority? The law says its definition of financial institutions is "not limited to" banks. The Obama administration emphasized this point to the Supreme Court in a memorandum defending its actions against Indiana pension funds that hold Chrysler bonds. And GM and Chrysler do finance dealer inventories and consumer purchases, a bank-like function.

In his concluding graphs, Lane comes full circle, writing that there are gray areas in the law, and “sometimes the president can get away with stretching his authority because Congress would rather not be held accountable for formally defining it.” He concludes in the final graph that the “GM-Chrysler deals appear to be such an instance.”

In other words, this is a column that, at the very least, should have been inverted; as written, the charge that Obama’s moves violate the Constitution are given prominent airing up front and only those who get to the final graphs see how little substance they have.

Again, the point isn’t to defend the auto-makers’ bailouts. I think the column simply illustrates the degree to which the Beltway media gives credence to, and amplifies, every partisan accusation, no matter how thin. And it speaks to how that tendency distracts from more relevant analysis.

Joshua Holland is an editor and senior writer at AlterNet.