When President Bush gave $13.4 billion in loans to failing auto companies on Friday, he was not acting with any specific authority granted him by Congress. By constitutional design, the legislative branch holds the power of the purse, and in this case, Congress had already considered and rejected such assistance in the last several weeks. In an attempt to justify his decision Bush claimed that “Congress failed to act,” but what he really meant was that Congress did not act as he pleased.
Acting through the Treasury Department, Bush tapped into funds from the Troubled Asset Relief Program (TARP) to give GM and Chrysler enough cash to extend operations through the end of March. TARP was created by Congress to address problems in the financial markets by purchasing troubled assets from struggling banks and other institutions. By targeting the financial industry legislators hoped to ease the credit crunch impacting the economy as a whole. It was never intended as a corporate welfare slush fund.
Republicans Bush’s usurpation of legislative prerogative has angered conservative activists and many congressional Republicans, who would do well to loudly condemn the president’s actions. Final judgment on Bush’s decision may come when it becomes clear that this loan will either not be repaid or that the companies eventually seek bankruptcy anyway. Whatever happens, we know what already has: a highly questionable use of executive power and an absolute abandonment of free market principles.
Initial accounts of the bailout from some of Principally Political’s preferred business news outlets:
Forbes: A Bailout For Detroit
Investors Business Daily: GM, Chrysler To Get $17.4 Bil In Loans To Sputter Into ’09
Wall Street Journal: U.S. Throws Lifeline to Detroit
US News & World Report: Bush Offers Chrysler, GM $17.4 Billion Bailout – With Strings
George Will: Bush Stretches Executive Powers Again
Heritage Foundation: Bush’s Awful Auto Bailout