What the Government Can and Cannot Do

For the first time in decades there seems to be a serious discussion about the role of government in a free society and the question of what it "can" and "cannot" do is becoming ever so common. Rep. Michele Bachman (R-MN) had an excellent exchange with the Secretary of Treasury Tim Geithner on this subject.

The issue being discussed was the Constitutionality of the bailout. Geithner was being questioned by the House Banking Committee. The exchange went something like this:

BACHMAN: By what authority did the Treasury Department bailout major financial institutions?

GEITHNER (clearly looking puzzled by the question): What do you mean?

BACHMAN: What legal authority did you have to do this?

GEITHNER (almost looking guilty and certainly more confused): Congress said we could.

BACHMAN: What authority did Congress have to do this?

From there the conversation digressed to one very similar that a child with his hand stuck in a cookie jar would say to a parent. "Bobby said I could do it." Of course, Bobby didn't have the authority, but we will blame him anyway. That is the dilemma today. We have years of Constitutional authority that has deteriorated away and a government that largely runs on autopilot. This is beyond government based on "precedent," which means new laws are tested against others that passed court muster. This is filled with enough peril, but the new model is to rapidly pass laws and see if they hold up or not. With so many years of complacency, many things become law that would not have had a prayer a few generations ago.

So the question of what government can and cannot do remains. The answer to me seems simple. You have to read the source, which is the US Constitution. It is a very short read, measured in dozens of pages. The document is also very straight forward:

• What the Government can do is found in a short section of the Constitution often referred to as the enumerated powers (Article I, Section 8). There you will find seventeen things the government can do. Really interesting things like post offices, post roads, and standard weights and measures. Very little of what government does today can be found as a listed power of government.


• Many through out the states that were needed in ratifying this Constitution noted a "necessary and proper clause" in Article I, Section 8 that was designed to make sure these 17 things would be allowed to be fulfilled (noting the problems the government had under the Articles of Confederation before). Because of their concerns about the fact that some could interpret that clause as anything those in government deemed "necessary and proper," they forced the government to add Ten Amendments to the Constitution, also referred to as the Bill of Rights.


• "Amendments", as the name implies is about changing. So these amendments changed any assumptions or potential loopholes in the Constitution in the areas they addressed. When it comes to the issue of government power, the Tenth is the most important of these amendments, stating that "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Simply put, if not an enumerated power, it is for the states or the people. Period. If people want socialized health care, move to states like Oregon or Massachusetts that have such programs or even try to pursue such in their own states. The Founding Fathers were brilliant in understanding that a "one sized fits all" form of government would eliminate competition in policy and have people with no freedom of choice. That, more than anything else, made them believe in state rights.

In spite of the clarity, government has been moving towards the elimination of our freedoms for generations. To move back in that direction will be challenging, but is necessary. What our government is allowed to do according to the law, however, is obvious. To think differently is disingenuous.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Herb Allison: The Man of TARP

The first in an series of articles on Barack Obma's Czars.

Upon being elected President -- and during his State of the Union Address -- Barack Obama made it clear that his priorities were "reforming" health care, expanding education, and changing the way people get their energy. These three areas also reflect the earliest appointments Obama made of "Czars." Little did we know, it was only the beginning. The President has since gone on to make 28 such choices covering an equal number of areas, and there appears to be no end in sight of how many more he might have.

Presidents have appointed Czars for years. They are controversial because they do things, in terms of developing policy, without direct Congressional scrutiny. Historically, Czars were separate from the department that covers the same policy issues. This is not the case in the Obama Administration, who has three Czars who are also serve under other cabinet members. One of those is Herb Allison, who is the Assistant Secretary of the Treasury for Financial Stability or affectionately called the "TARP Czar."

Allison was appointed in April and was just confirmed this month to oversee the bailout program. Born in 1946, Allison graduated from Yale University with a degree in philosophy and went on to get a MBA from Stanford after serving four years in the Navy.

Highlights of his career include:

• Allison started his professional career in 1971 in the investment industry at Merrill Lynch in New York and worked his way up to COO in 1997.


• In mid-1999 Allison left to become National Finance Chairman of the McCain for President campaign. In spite of this, Allison has long hedged his political bets, with the Federal Elections Commission showing contributions to both Democrats and Republicans.


• Next, Mr. Allison became President and Chief Executive Officer of the Alliance for Lifelong Learning, Inc. from 2000 to 2002, a joint venture of Oxford, Stanford and Yale Universities, offering online, college-level courses to adults.


• In addition, Allison has been a director of Time Warner, on the Advisory Board of the Yale School of Management, on the Advisory Council of the Stanford Graduate School of Business, and the Federal Reserve Bank of New York's International Advisory Committee.


• He was a director of the New York Stock Exchange from 2003-2005. Recently, Allison also chaired the Business-Higher Education Forum and the Vietnam Education Foundation and served on the Business Roundtable, and the Financial Services Roundtable. Furthermore, he served on the Board of Directors of The Conference Board, the Board of Trustees of The Economic Club of New York, the New York State Commission to Modernize the Regulation of Financial Services, the New York State Commission on Education Reform, and the Council of Graduate Schools Advisory Committee.


• Former CEO of Fannie Mae during the financial crises of September 2009, until he was approved by the Senate for his new position.

The accountability issues surrounding the duties of a position such as this are vast, ranging to measures on how well TARP is working to questions on how the dollars are being spent. There are also the many constitutional issues that have largely been ignored when it comes to the spending of these dollars. In the end, this position demands Congressional scrutiny, the Administration believes it should be hiding in the White House. Is it any wonder why many are concerned about the rise of the Czars?

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.