The Bailout of the US economy: The Legality of the Proposal
The United States is faced with one of the worst economic meltdowns it has ever faced in modern times. People are bombarded with news on how bad the economy is, and how long the recovery will take, if the market will recover at all. But whatever the situation, lawmakers and the White House just cannot go and lay down legislation that will violate what the Constitution dictates. They must go through the process that the law has laid down.
Recently, the United States passed and with the signature of President George W. Bush, enacted into law the 2008 Emergency Economic Stabilization Act (William Watkins, Jr.). Under the provisions of the law, the Federal Treasury is given the authority to acquire so-called “troubled assets” and regulate the same (Watkins, Jr.).
These “assets” the by-product of some troublesome lending strategies employed by the Federal government in the housing sector-loans fiasco (Watkins, Jr.). Under this program, those getting mortgages for their planned home acquisitions would not be made to pay for their loans with no down payments and no instance of examination about the income level of the mortgage applicant (Watkins, Jr.). As a result of this practice, many American started a buying spree of mansions they can ill afford to pay for and the banks were burdened with value-less commercial papers (Watkins, Jr.).
Bailout Law vs. the fundamental law
In a survey conducted by MSNBC, 62 percent of the respondents did not approve of the Federally-instituted bailout (The Market Oracle). Lobbyists are working overtime to appease the public’s resentment over the approval of the bill, approved 75-24, by the United States Senate (Market Oracle). The Senate took up the $ 700 billion bill in an apparent move to leverage on the House for the latter to change their stand on the bill when the bill comes back to them for deliberation (Market Oracle).
Here is where the violation lies. In the 1st article of the United States Constitution, all revenue generating measures must originate from the House of Representatives (Market Oracle). It is stated in Section 7, paragraph 1 of the Articles where it explicitly cites the provision that these types of legislation are only legal if it comes from the House first (Stephen Nietzke).
By the act of the Senate, in allowing the bill to originate from them and not from the House, it will be considered as an unconstitutional act (Market Oracle). Sadly, there is no party that will even try to mount an expostulation on the law for lack of political will or time (Market Oracle).
As such, senators who cast their votes to pass the bill were in clear violation of their oaths to defend and uphold the fundamental law of the United States Nietzke). In addition, the vote of the senators for the passage of the bill can be considered as a felony conspiracy under Federal crime statutes (Nietzke).
The act was in violation of Federal law 18 USC 241(Nietzke). Under this law, any person who commits with another person that will infringe or injures the rights of a legal or juridical entity any right enshrined in the Consitution shall be sanctioned with a prison term of 10 years (Nietzke).
It must be noted that the Constitution was not adopted by the act of local legislative bodies, but by the sovereign will of the people in the states (Watkins, Jr.). As such, the Constitution is not merely a guide for the operation of government, but in essence the voice of the people on the acts and conduct of the government (Watkins, Jr.).
It is recognized that the extreme conditions the United States is in will warrant the use of draconian measures (Robert Levy). But it cannot be said that the situation allows the Federal government in these times to forego the ambit of the law to solve the current economic morass (Levy).
Under the law, the Secretary of the Treasury is afforded broad and unregulated power to buy mortgage-encumbered assets within the United States and to regulate, manage and even sell these assets (Will Huhn). Section 2(a) of the EESA specifically lay down this power in the law (Huhn).
But here is another conflict with the Constitution. While Congress argues that many instances and precedents does give it ample leeway in enacting such statutes, the law does not give specific and detailed guidelines on the implementation of the law (Huhn).
The doctrine of separation of powers as stipulated empowers Congress to adopt statutes for the Executive branch to enforce those laws (Huhn). But the Congress cannot just abdicate its lawmaking power to another branch, in this case, the Executive branch (Huhn).
The United States Supreme Court ruled that if the legislative branch does delegate any of its powers to the Executive branch, the delegation must be accompanied by an “intelligible principle” by which the Executive will be guided in the performance of its duties (Huhn). This principle will be used as a benchmark to see if the Executive branch has abused or overreached its powers (Huhn).
This having been said, it must be noted that the Federal authorities does not possess powers to acquire these assets with the money of the American people, much less put themselves in a position of control in private financial institutions (Levy). In addition, Congress cannot give almost blanket authority to an official of the Executive branch of government and have that person exercise their powers (Levy).
Congress can initiate measures only if they fall under the legal ambit of the law, and not from their intentions, however good they may seem (Levy). The precedent set here is that Congress can do away with the Constitution if they see fit. That is a situation that breeds disregard for the law (Levy).
Works Cited
Huhn, Will. “The bailout legislation- is it constitutional”?
<http://www.ohioverticals.com/blogs/akron_law_cafe/2008/09/the-bailout-legislation- is-it-constitutional/>
Levy, Robert A. “Is the bailout constitutional”? Legal Times 20 October 2008 Washington, D.C.
<http://www.cato.org/pub_display.php?pub_id=9729>
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