Treasury Secretary Henry Paulson draft proposal for the bailout of struggling financial-services firms sought to make himself the most powerful unelected official in American history through his proposal to take charge of vast sectors of the U.S. economy — setting policy, buying and selling assets, determining whether financial institutions thrive or collapse — with no oversight.
Under Paulson’s draft plan, Congress and the courts would have been barred from reviewing or challenging his moves to stabilize financial markets — effectively making him the nation’s economic czar.
That’s not just a dangerous power grab for economic and politic reasons. It’s unconstitutional.
Paulson’s power grab was specifically spelled out by the treasury secretary in Section 8 of his proposal, which read: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.“
Senate Banking Committee Chris Dodd, the Connecticut Democrat who sought his party’s nomination for president this year but has arguably emerged as a more influential player in his role as the congressional point-man on a crisis that is bigger than an election, pushed back on Monday.
Dodd offered a plan to give Paulson extraordinary — and, frankly, excessive — powers. But the senator also moved to place tighter time limits on the period in which the treasury secretary would be able to exercise those powers, to establish an special inspector general to monitor the program and to set up an emergency board with two congressional appointees to provide oversight.
Ultimately, Dodd and his compatriots should be able to restrain Paulson’s power grab.
But they must be as specific in their constrain of Paulson as the treasury secretary was in his overreach.
Section 8 of the Paulson proposal must be stripped in its entirety.
There can be no vagueness, no gray area.
Otherwise, the treasury secretary would become a more powerful — and unaccountable — figure even than our powerful and unaccountable president. And, as such, he would be operating in direct conflict with the Constitution.
The nation’s essential document makes it clear that every member of the executive branch is subject to legislative and judicial review.
Congress cannot delegate its oversight authority to a cabinet member, even in a time of turmoil. The opening section of the Constitution gives all — emphasis on all — legislative authority to the House and Senate. Under the well-established constitutional doctrine of nondelegation, Congress cannot cede that power in the manner that Paulson’s draft plan proposed — or, for that matter, in any manner whatsoever.
“It’s hard to run afoul of the nondelegation doctrine, but if anything does, this is probably it,” Jamie Raskin, a professor of constitutional law at American University’s Washington College of Law, told the Maryland Daily Record, a newspaper that deals with legal issues. “How does Congress just give away $700 billion and tell the Secretary of the Treasury to figure out the rest?”
Raskin, a state senator, said that the doctrine of nondelegation “was the first thing I thought of when I heard that the administration’s entire plan was on three pages and that the third page said $700 billion would be allocated to this purpose [and] programmatic details are to be fleshed out by the treasury department.”
It is good that Raskin and a few others are reading the fine print.
It is necessary that Congress do the same.