The Foundry

The Washington Examiner’s Tim Carney points to news from The Hartford Courant that the development project at the center of the Fifth Amendment takings clause case Kelo v. City of New London has just been abandoned by Pfizer. Watch The CATO Institute’s recitation of the case:

Remember, the core of the government’s case for seizing Susette Kelo’s home, was that they could put her property to a greater “public use” by giving it Pfizer. Now it turns out that letting that land lie unused was the only use Pfizer actually had for property.

Kelo is not the only recent attack on private property. Former Heritage Scholar Andrew Grossman explains how the Obama administration has used TARP to undermine private property:

General Motors and Chrysler already carry significant loads of “senior” debt with priority over other claims, and it is a standard feature of such debt agreements that borrowers cannot subordinate this senior debt—that is, as a condition of the loan, the borrower agrees not take on additional debt that has a higher priority and would therefore imperil the senior debt.

But that’s precisely what the bailout bill purports to do.

As Randy Picker of the University of Chicago Law School explains, that may amount to a taking under the Fifth Amendment of the Constitution, which prevents the government from taking private property for public use without “just compensation.” Without providing any compensation to senior creditors, the bailout legislation would convert their loans to junior debt, increasing the likelihood that they will not be paid, which amounts to a partial or total taking.