President Bush announced today that because Congress failed to authorize a bailout of the U.S. auto industry, by executive order the National Government will be bailing out automobile companies using funds from the Troubled Assets Relief Program (TARP) , which was established earlier this year by the Emergency Economic Stabilization Act of 2008 to bail out failing financial institutions.
This is a unbelievably devastating blow to our constitutional government.
The Troubled Assets Relief Program was dishonestly sold to the American people as an investment program. We were told that the plan was that the national government would buy subprime mortgage backed securities from failing finance institutions. These mortgages were attached to real properties and so they had inherent value, even though the irrationality of the market was causing them to be treated as if they had no value at all. Having bought them, the government would then hold onto them until the market became rational again, and then resell them at a profit. The profit would then be used to pay down the national debt. They argued that because the properties would be resold at a profit, it was not a bailout, but an investment that would rescue the financial industry and potentially help pay down the national debt.
The whole plan was suspect, but warning that a failure to pass the bill would result in economic armageddon, the bill was hurried through Congress.
But when the $700 billion TARP funds became available, the funds were not to used to buy subprime mortgages. President Bush and the Department of the Treasury pulled a bait and switch and only 14 days after the bill passed, restructured the program to use the first $250 billion to buy equity stakes in banking instiutions. So instead of buying the troubled mortgages, the government was now a part owner of the financial institutions, with the potential to profit if the banks became profitable again.
This month, when the auto industry came asking for a bailout of its own, Congress failed to pass an new bill to do so. So what does President Bush do? He authorizes, by executive decree, $17.4 billion of the TARP funds as a loan to the automobile industry.
Wait a minute! Can he do that?
Um. No. It’s illegal or unconstitutional.
If Congress fails to pass the bill, the President cannot simply go ahead and reinterpret “financial institution” to mean “automobile company” and essentially legislate by an emperor’s decree. But that is exactly what just happened.
We live in truly dire times. I pray that we are not yet ripe for destruction. We must fervently pray to God Almighty that he will frustrate the designs of those who would ruin our nation and that he will raise up wise, honest men and inspire them with the means to save us from economic ruin while still preserving our Constitutional Republic.
