Events require judicial activism

George Will:

...

Richard Mourdock, Indiana's state treasurer who has been criticized for contesting the terms of the Chrysler bailout, notes that "no critic has ever challenged us on the points of law." Indiana's pension funds for retired teachers and state police officers were among Chrysler's secured creditors. It has been settled law that secured creditors, as compensation for lending money at rates lower than the borrowing company's condition might justify, are first in line to be paid in the event of bankruptcy. Indiana's funds and other secured creditors received less per dollar than did an unsecured creditor, the United Auto Workers, which also got 55 percent ownership of Chrysler. So the government is simultaneously subsidizing Italians and injuring retired Hoosiers.

The Supreme Court has said nothing about "bailout law," a phrase that currently is an oxymoron. America as Bailout Nation is governed by unconstrained executive discretion.

Last September, Treasury Secretary Henry Paulson testified to the Senate that TARP money was necessary for ailing "financial institutions." Nowhere in the bill's 169 pages was there any reference to government funding of "automobile" or "manufacturing" companies. In November, Paulson told a House committee: "I've said to you very clearly that I believe that the auto companies fall outside of (TARP's) purpose." Then advocates of a Detroit bailout proposed legislation to authorize that. It failed. So President Bush's Treasury Department gave an "interpretation" of the law that ignored the unambiguous terms of the pertinent legislation, the history of its enactment and Treasury's own prior interpretations of it.

...

Of course courts should not make policy or invent rights not stipulated or implied by statutes or the Constitution's text. But courts have no nobler function than that of actively defending property, contracts and other bulwarks of freedom against depredations by government, including by popularly elected, and popular, officials. Regarding Chrysler and GM, the executive branch is exercising powers it does not have under any statute or constitutional provision. At moments such as this, deference to the political branches constitutes dereliction of judicial duty.

"At present," notes the Economist, "there's enough capacity globally to make 90 million vehicles a year, but demand is little more than 60 million in good economic times" (emphasis added). Unfortunately, says Reason magazine's Jacob Sullum, America's president "can imagine a world in which the internal combustion engine is obsolete but not one in which GM is." So, doubling down on his predecessor's misbegotten policy, the president is acting strenuously to perpetuate some of America's portion of the excess capacity.

...


For capitalism and free markets to work, property rights must be enforced. These auto deals ignore that principal and they will mean companies with unions will be paying a premium for investment capital and they already are.

Comments

Popular posts from this blog

Should Republicans go ahead and add Supreme Court Justices to head off Democrats

29 % of companies say they are unlikely to keep insurance after Obamacare

Bin Laden's concern about Zarqawi's remains