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  • TARP is Deficient Auto Savior

    My Heritage colleagues have already noted that the auto bail-out violates the terms of the TARP legislation by extending funding beyond “financial institutions.”

    It also appears the latest funding pledge to bail-out auto makers may have violated another Federal law, one normally taken quite seriously: the Anti-Deficiency Act.

    When Congress approved TARP it approved up to $350 billion, with more funds available only after a certification by the President and a 15 day Congressional review. The president has not made a certification, Congress has not reviewed it. With the auto pledges Treasury has now committed over $358 billion under the TARP program.

    The Anti-Deficiency Act, whose roots go all the way back to 1870, enforces the Constitution’s requirement that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The Act prohibits spending or “obligations” exceeding amounts available in appropriations or before an appropriation is made.

    Normally, Anti-Deficiency Act violations are taken quite seriously. The Act is the trigger for the periodic government shut downs that occur when Congress fails to pass annual appropriations. Violations require reports to OMB and Congress; there are even criminal penalties for knowing and willful violations.

    On November 20, in a speech at the Reagan Library, Treasury Secretary Henry Paulson cited the Act as stopping Treasury from rescuing Lehman Brothers: “Federal law, and in particular the Anti-Deficiency Act, prohibits Treasury from spending money, lending money, and guaranteeing or buying assets without Congressional approval.

    On December 19 Paulson stated that the commitments to GM and Chrysler “effectively … allocated the first $350 billion from the TARP.” Paulson acknowledged the need for Presidential and Congressional action to release additional funds. “It is clear,” Paulson said, “that Congress will need to release the remainder of the TARP to support financial market stability. I will discuss that process with the congressional leadership and the President-elect’s transition team in the near future.”

    Four days later, however, and without explanation, the Treasury Department made an additional $2 billion in TARP commitments to a score of banks. Then, on December 29 Treasury pledged $6 billion to GMAC, putting the Department $8 billion over TARP’s appropriated limit.

    An unnamed Treasury official briefing reporters on December 29 defended the commitments claiming that “from a short-term cash-flow basis” the department is not close to the $350 billion limit because some commitments made have not yet been fulfilled. The problem with this excuse, as Secretary Paulson himself implicitly admitted on December 19, is that the Anti-Deficiency Act prohibits not only expenditures, but a “contract or obligation” prior to an appropriation. Indeed, many Anti-Deficiency Act violations are triggered by contracts or pledges. For instance, in 2004 an FCC grant program for schools was suspended because the agency had promised more funds than it had cash on hand, even when the FCC knew grantees would never ask for the full amounts pledged.

    Paulson was right on November 20, “the Anti-Deficiency Act prohibits Treasury from spending money, lending money, and guaranteeing or buying assets without Congressional approval.” On December, 19 Paulson acknowledged that he had consumed the entire $350 billion Congress had approved. He acknowledged he needed approval to spend more. But 10 days later Treasury had committed an additional $8 billion, and the only explanation was a lame excuse from an unnamed official.

    Since Paulson himself specifically cited the Anti-Deficiency Act as limiting Treasury’s authority on November 20, he owes the public at least some explanation of why the same law did not apply a month later.

    Posted in Economics [slideshow_deploy]

    4 Responses to TARP is Deficient Auto Savior

    1. Barb -mn says:

      We can't have this ongoing deception and laws of convenience. The government has been doing much behind the backs of the citizens. ESPECIALLY BREAKING OUR LAWS!!!

      When it comes to head, the citizens are held to any accountable expense.

      This country has no leadership. Just a bunch of clowns doing anything at any time with our money. Clowns who think they are superior to the human race. Clowns who make undeserving amounts of money without limit. CLOWNS. Where no CLOWN IS AT FAULT. Governing clowns, where job descriptions has none.


    2. Sarah -ca says:

      Wow! I thought this bailout was illegal I just didn't know which laws. All the more reason for me to get my Law degree. I think I know exactly what I want to do.

    3. Larry L. Cook, Jr. says:

      I have always known the government, (not our gov't.) has been deceptive with the American public. I say not our gov't because it seems we no longer have much of a say in what goes on any more. We have effectively handed over our individual responsibility and decision making ability to the government. We don't want to get involved. The "Let someone else do it. It's not my problem" mentallity has brought us here. We did this to ourselves. So, where do we go from here? How do we take control of our own responsibilities again? How do we make our voice heard again? Ladies and Gentlemen, we have a problem that needs to be resolved through the use of sound wisdom, patience and good judgement. Any ideas?

    4. Mike Sheahen, Hickor says:

      Further glaring evidence and proof of the fact that, not only are Liberals/Socialists in control of Congress, but, like his father and his father's administration before his, G.W. Bush and the (G.W.) Bush Administration are not, in fact, "Conservative", but are, in fact, "Liberal", as shown by their actually participating in this Liberal/Socialist money and power-grab.

      Indeed they are playing the same "Me too!" game with the Democrats', spending like drunken sailors, which is the same game which has already cost We the People control of our Congress, and now, thanks to “election -08”, the White House.

      See what happens when you play out in the “middle-of-the-road”? Roadkill!

      So now, with a “slow slide down into Socialism” being turned by “election ‘08” into a headlong dive down into it, the only question now is:

      How much freedom and prosperity must we lose to Liberalism/Socialism before enough of We the People finally “wake up”, put a stop to it, and recover at least some of the freedoms and prosperity lost to Liberalism/Socialism (some of which, because of “election ‘08”, etc, will never be recovered), or must it be as too many freed people from other Marxist/Communist/Socialist and Totalitarian countries have said (quote) “Americans do not appreciate the freedoms and prosperity they have, and will not appreciate them until they are gone, and then it will be too late”?

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