Posted by
Jonathan Cooke on Tuesday, April 21, 2009 4:17:12 PM
My largest trepidation about governmental expansionism (the 900 lb gorilla sitting in the corner of the room looking at me as if I were banana shaped) has always been the Commerce Clause (United States Constitution Article 1, Section 8, Clause 3.) Commonly referred to as the “Interstate Commerce Clause”. It has arguably been misused in subjugating the powers of States unto the will of Congress, especially since the presidency of Franklin D. Roosevelt and his “New Deal”. The Commerce Clause created some of the largest expansions of Congressional powers our nation has ever witnessed. "To regulate Commerce … among the several States …” became the de facto thuggish standard in preempting State law and leveraging powers not actually involving commerce, to wit; that they could potentially involve future activities that may eventually lead to commerce, even if not currently doing so. An example of this would be the Supreme Court case of Gonzales v. Raich in which the Federal Government argued (successfully) that a man in California growing medical marijuana for his own personal consumption could, in theory, affect prices within the interstate commercial market for marijuana, although no such legal market even existed. Merely that such a market could conceivably exist in the future was enough to satisfy the Supreme Court that California’s law could be drug outside by Federal law, roughed up, kicked in the statutes and then tossed into a trash compactor while the Supreme Court stands around selling hot dogs, all due to the court's very broad interpretation of the Commerce Clause. This case affirmed the position of the Federal government to override the laws of all States of the Union with its own Controlled Substances Act, although such powers were never enumerated to Congress within the Constitution and it is only through judicial activism on the bench coupled with a ludicrously far-reaching interpretation of the Commerce Clause (and it’s brother with the grin and the brass knuckles; the "Necessary and Proper Clause") that such a usurping of States Rights could even take place. Well, I thought that was bad …
Now we have another issue arising that could potentially make interpretational abuse of the Commerce Clause rather insignificant in this new Federal expansionism. Everyone's getting a square kick in the jewels on this one. Namely, “tests” being required for the repayment of Troubled Asset Relief Program (TARP) loans to the banking industry. No, not just for payment of TARP funds, that’s obvious, but in fact tests for repayment. Yup. Throughout the history of finance I think you’d be hard pressed to find anyone who has loaned money to suddenly become reticent and even unwilling to accept repayment. Getting people to repay loans has historically involved such reminders are pliers, thumbscrews and possibly talking into someone's ear (it's very effective when the ear is several feet away from their head at the time.) Even in the darkest of alleys with the shadiest of characters in some distant alternate universe it is unthinkable to imagine a loan shark uttering, “Erm, you know what, you just hold onto that cash, I don’t really want it back right now, guv.” It’s just not the type of financial strategy that works outside of Bizarro World. Unless, that is, you’re the Federal government which already had a natural tendency toward Lemon Socialism and now sees an opportunity to take the helm of the financial sector, against the will of those currently manning the poop deck. (No pun intended, really.) Examples, you say? For instance, Goldman Sachs and J.P. Morgan have both experienced fiscal recoveries exceeding previous forecasts are now both attempting to pay back the $35 billion they borrowed from the Federal government under TARP. The Federal government’s position? They don’t want the money back. In fact, they’re getting more than a little annoyed at being asked to take the money back. Insane? Not really, there’s a logical reason (enter Darth Vader stage left and queue the Imperial March) in that allowing repayment of the $35 billion would sever the marionette (that’s ‘puppet’ for Americans) strings that the administration is using to leverage its growing control over the private sector. I came from a socialist country, England, and recognize the smell of it. Aspects of this new control associated with TARP have been visible through forced limitations on executive compensation all the way to the firing of GM’s CEO, Rick Wagoner at a mere phone call from the White House. Many smaller banks have already paid back TARP funds, but the major players … well, those strings are just too juicy to give up right now. In many respects this level of power being wielded by the Federal government would have brought a tear of admiration from the previous administration, which was responsible for the last greatest expansion of the Federal government. Republican or Democrat, it seems to make little difference at this point in the game. Both parties are more than happy to expand the power base of a more centralized Federal government, to the inevitable detriment of constituent States, acting under the guise of creating reactionary policies to a crisis that it created itself in no small part by passing the Alternative Mortgage Transactions Parity Act (AMTPA) and Community Reinvestment Act (CRA), which arguably were major catalysts to the subprime mortgage meltdown prompting this expansion. Set the house on fire, then yell “Fire!” and just happen to be standing around and own a bucket company, and the payment for the buckets can be the house. This kind of stuff happens in Russia, it's a bad bandwagon for us to jump on.
Okay, I'm almost done ranting, I promise. Simply this ... that eventually, before the constituent States of the Union have been rendered completely impotent by Federal expansionism we need to take a long hard look (certainly before Texas secededs from the Union again) at devolving some (if not many) of the powers that the Federal government has bestowed upon its bloated self via activist Supreme Courts back to where the Framers of the Constitution intended those powers to reside, firmly within the hands of the States.
Jonathan RF Cooke
21 April, 2009
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