2008 will be known as the year the United States set aside any pretense of free enterprise. A nation that had flourished with the concept of limited government economic intervention turned to the seductive allure of massive federal intrusion. Washington will now more than ever redistribute wealth in the name of compassion, pick winners and losers, and decide how the fruits of your labor will be spent…
Admittedly, we’ve been heading in that direction, sometimes gradually but inexorably, for decades. James Madison, often identified as the father of the Constitution, would have been astonished by the shift. He’d written: “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents. . . ”
When the ostensible crisis hit last fall, everyone from President Bush to Barack Obama insisted that Congress needed to take immediate action to bail out the financial industry. Sounding like used car salesmen, they argued it couldn’t wait for a month or even for a week; a $700 billion deal had to be cut now. The details could all be sorted out later.
In the meantime an enormous bailout bill was essential, even if it included only the most basic provisions. You know, items like tax breaks for toy arrows, imported rum, NASCAR facilities, wool producers and American Samoa economic development.
And where have the many billions of dollars already released to financial service institutions go? We know some went for lavish parties and some for executive bonuses at companies that should have gone belly up and their managers straight to the unemployment line.
The Government Accountability Office says the Treasury Department doesn’t have the capability to monitor what’s going on. Moreover, “It is too soon to determine whether the program is having the intended effect on credit and financial markets.”
Congress is providing as much accountability and oversight as it usually does. Then again, what would you expect when only five years ago, at a time George Bush requested more supervision of government sponsored mortgage operations, the current chairman of the House financial services committee assured Americans:
“These two entities - Fannie Mae and Freddie Mac - are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
A principal element of the financial catastrophe was government’s devotion to the concept of affordable housing for everyone, including those who couldn’t afford it. Without government pressures, it’s not likely many lenders would have given mortgages to people with terrible credit records, limited if any work history, and no verified sources of income.
The $700 billion bailout wasn’t the end. The floodgates had been opened. Seemingly everyone’s lining up at the federal trough, hoping for a piece of the action. Automakers need a bailout, as do governors and mayors, commercial developers, retailers, homeowners, universities, insurance companies, the airline industry, and the list goes on. The argument is always the same: If (fill in the blank) doesn’t get immediate help, the country will slam into a depression that’ll make the 1930s look like good times.
In a nation once populated by rugged individualists, by people who depended on themselves rather than government, we’ve witnessed a hurried, massive abandonment of self-reliance. The government that to a great extent orchestrated the fiscal crisis will now solve it through huge transfusions of tax dollars. People who’ve made bad decisions will be rewarded by innocent bystanders.
Heaven knows George Bush bears much of the blame. It’s he who for years didn’t veto irresponsibly wasteful legislation and he who avidly contributed to bailout fever. Many Americans appear wary of bailouts, yet they’re unable or unwilling to send people to Washington who share their qualms. Electing Obama and more Democrats will accelerate the transformation to bailout nation.
I can’t imagine the next president echoing the wisdom of another Democratic president, Grover Cleveland. In his second inaugural address, he denounced “the prevalence of a popular disposition to expect from the operation of the Government especial and direct individual advantages.” He maintained paternalism was “the bane of republican institutions and the constant peril of our government by the people. . . It undermines the self-reliance of our people and substitutes in its place dependence upon governmental favoritism. It stifles the spirit of true Americanism and stupefies every ennobling trait of American citizenship.
“The lessons of paternalism ought to be unlearned and the better lesson taught that while the people should patriotically and cheerfully support their Government its functions do not include the support of the people.” Another Democratic president, John Kennedy, expressed a similar sentiment when he pointedly declared we should ask not what our country can do for us.
When will the bailouts end? It’s impossible to say. One thing I do know is that earlier generations wouldn’t recognize the United States of America. Sturdy, self-sufficient Uncle Sam is no longer with us. He’s been replaced by Big Nanny.
This Mike Bates column appeared in the January 1, 2009 Reporter Newspapers.
Mike is a Capitol Hill Coffee House staff writer.