Czarism In Action: Geithner Plan Circumvents Normal Democratic Process

by: David Sirota

Tue Feb 10, 2009 at 12:42

A few weeks ago, I wrote an article for the San Francisco Chronicle about the rise of czarism in American politics, and today we get our first taste of what that actually means on policy.

Notice this snippet from the Washington Post about the latest bank bailout scheme, priced at roughly $1.5 trillion:

In announcing the plan, Treasury Secretary Timothy F. Geithner will not ask Congress for more funds than the roughly $350 billion that remain in the Treasury Department's original rescue package for the financial system, though congressional sources said such a request could come later if the new programs are unsuccessful. The rest of the money would come from other government agencies, such as the Federal Reserve.

How can this be a $1.5 trillion plan, that doesn't ask Congress for any more money? Because the Treasury Secretary is effectively circumventing the legislative branch - ie. popular democratic channels - and relying on autocratic means of handing over more cash to Wall Street, most prominently, the Federal Reserve.

The reason Geithner has chosen this path is because he knows that Congress would likely reflect the will of a very angry public and either reject or severely reform his bailout plan. So rather than allow public input into the plan via Congress, he's just going around democracy entirely. Indeed, out of the $9.7 trillion that Bloomberg News estimates is being spent by our government on this economic crisis, just $1.55 trillion (or 15%) will have been explicitly approved by the Congress (the $750 billion TARP and the upcoming $800 billion stimulus). And, of course, of that $9.7 trillion, just 4.6% is being devoted to spending on regular people (as opposed to banks).

I'm sure the official explanation for this behavior is the same tired version of the "emergency requires speed" rationale that has trampled democracy throughout the ages. But that's a cover for the real motivation: to avoid being stopped by the public.

This is precisely the kind of czarism that's on the rise in America as we become a kind of authoritarian capitalism. The only question is whether Congress will sit back and take it, or reassert its constitutional role.

David Sirota :: Czarism In Action: Geithner Plan Circumvents Normal Democratic Process

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Seems like a good move for progressives... (4.00 / 2) raise holy hell about this, with the czarism frame as a centerpiece. It shouldn't be difficult to generate public outrage at this, but we can do so by advancing progressive frames.

We know the right will be organizing on this. Why cede the organizing and messaging field to them?

Obama is nuts to embrace this and even Axelrod knows it.

Well, isn't the real (4.00 / 3)
problem here the undemocratic, unaccountable Fed?

Seems like progressives need to finally get serious about pushing Dems in Congress to rein in the Fed.

Czarism? (4.00 / 1)
I don't understand this complaint. All funding has to go through Congress. If Congress, say, funds the Department of the Tresury and the FED, there is no obligation to go back later and ask to use those funds again.

Nor do I think it is particularly radical to want those departments to do their jobs and respond to the crisis. They are funded for a reason and designed, at least to a degree, to be flexible.

(This is not so different then if Obama announced that the Department of Justice will shift from emphasizing enforcing immigration and voter fraud "violations" to prosecuting white collar crime. It would not require going to Congress to get approval to do so).

And there is an important check on not overusing that discretion - the administration will be shifting funds that could be used for other things. Back to the DOJ example (and I acknowledge this is very simplified) - the shifting of emphasis only works if you're willing to scale back on immigration or voter fraud investigations/prosecutions. If you really think both are necessary you will have to go to Congress and ask for more funding.

Anyway, how marshalling already approved funding to reflect the President's prorities czarism rather than having a functioning executive branch that is properly responsive to a crisis?

(I mean, god knows I wouldn't want Obama to have to go to Congress before sending FEMA out if there was another Katrina either).

Anyway, I understand the argument that such a policy isn't wise, but I can't understand an argument that it is extra-constitutional or procedural improper.

Hold on... (4.00 / 1)
Maybe I missed something, but don't they get to the $1.5 trillion figure by the private funds they intend to attract?

Not that it sounds like a solid plan...

Conduct your own interview of Sarah Palin!

It's both (4.00 / 3)
Fed money as enticement, to lower private investors' risk.

Here's how Reich puts it:

In Geithner's plan, most of the heavy lifting will be done by the Fed. Fed loans will, it's hoped, limit investor risk enough to entice them into
"partnership" with government. Most members of Congress and 99.9 percent
of the public are unaware that the Fed has already committed over $2.5
trillion to get credit markets moving again, but with limited results so
far. There's scant oversight of the Fed, and the Fed's dealings don't show
up as additions to the federal budget deficit. (Yes, we live in a
democracy, but not when it comes to the Fed.)


[ Parent ]
Sharing The Burden. (0.00 / 0)
There is no doubt that if there is a deep and long recession homes will have to be shared. No civilized person would allow the unemployed and homeless to sleep in the streets while having an empty room. Those that refused to share their space would be rightfully punished by eviction. The task of living with a stranger can cause serious problems because food and sex would have to be shared. Our lives would be difficult but eventually the economy will return to normal and we all would get back our jobs and privacy.


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