Can’t We Just Jail Them All?

minute-man-2-lithoIf Hank Paulson, Ben Bernanke, Nancy Pelosi, George Bush and the other principals in the government’s attempted bailouts of our struggling economy were employed in the private sector they would be in danger of criminal indictment. The charges would be conspiracy to commit fraud and embezzlement.

Perhaps the most culpable of these would be Fed Chairman, Bernanke and Secretary of Treasury, Paulson.  It is alleged that the Fed has pumped some two trillion dollars into the efforts to reverse the current recession.  In opposition to Congress and in violation of the Constitution they have refused to reveal where the money went and who were the recipients.

Moreover, when they went to Capital Hill to lobby for the $700 billion bailout they agreed to use the funds to purchase toxic assets from banks and other mortgage holders.  After being granted authorization to use the funds, Paulson announced the funds would not be used for that purpose but rather to buy equity in financial institutions.  The acquisition of money through deceptive means is fraud, and the misuse of funds entrusted to someone for their own ends is embezzlement.

Article I, Section 9 of the Constitution requires that all money withdrawn from the treasury must be appropriated by law and an accounting of its expenditure must be published.  Members of Congress who voted for the bailout in order to curry favor with their constituents engaged in a misuse of treasury funds for purposes not authorized by the Constitution.

Appropriating public funds for the use of private businesses is not one of the enumerated powers.  Neither is it supported in this case by the doctrine of implied powers or the “necessary and proper” clause found in Constitution 1.8.19. To argue that the authority is given in Congress’s power to “regulate commerce” represents a  misunderstanding of the meaning of the phrase as used by the framers and understood by the citizens of the states who ratified the constitution.

“Commerce” referred to trade—the buying and selling of goods—not to the production or financing of those goods. It may be argued that finance is an ancillary part of commerce, or that it substantially affects the ability of commerce to occur.  Justice Clarence Thomas wrote a concurring opinion in 1995 in the case of “The United States vs. Lopez” in which he discussed this perversion of constitutional doctrine.

“… We [the court] have said that Congress may regulate not only “Commerce . . . among the several states,” U.S. Const., Art. I, §8, cl. 3, but also anything that has a “substantial effect” on such commerce. This test, if taken to its logical extreme, would give Congress a “police power” over all aspects of American life….”

“….Indeed, if a “substantial effects” test can be appended to the Commerce Clause, why not to every other power of the Federal Government? There is no reason for singling out the Commerce Clause for special treatment. Accordingly, Congress could regulate all matters that “substantially affect” the Army and Navy, bankruptcies, tax collection, expenditures, and so on. In that case, the clauses of §8 all mutually overlap, something we can assume the Founding Fathers never intended…”

The original intent of the bailout was to shore up the housing market, stabilizing it so that it would not adversely affect the rest of the economy.  Home ownership may have been a goal of the “New Deal” or the “Great Society” but it is clearly not a matter sanctioned by the Constitution for the federal government, and is not remotely related to the commerce clause.

The Commerce Clause gives Congress the Power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” While the buying and selling of a home might be commerce it is certainly not “interstate commerce” since it cannot be transported from one state to another.  Neither would the fact that a purchaser might be a resident of one state and purchase a home located in another make it an interstate commerce transaction in constitutional terms.

The fact that the precedent of case law over the past hundred or two hundred years might support such a position does not alter the constraints on government established by the Constitution.  I am reminded of the old theological question, “how long does a heresy have to be repeated before it becomes truth?”

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