Give Us Liberty (6 page)

Not surprisingly, the Obama administration's enthusiasm for the discretionary power of the program, originally scheduled to sunset in December 2009, has not waned. Treasury Secretary Timothy Geithner readily sent the pro forma letter to Congress required to extend the life of the program for two more years. The Democrats now in power seem intent on using TARP as a slush fund for various pet projects.

C
OALITION OF THE
U
NWILLING

T
HE DAY AFTER
P
AULSON
released his sweeping plan, FreedomWorks quickly connected with other free market groups to assess their willingness to fight. It was a surprisingly small group. But a principled few stepped up, notably Andrew Moylan of the National Taxpayers Union. The Club for Growth and the Competitive Enterprise Institute also weighed in, and Dan Mitchell at Cato and the folks at Reason.com offered much needed policy support. The groups joined forces with a few free market Capitol Hill staffers who also were feeling remarkably isolated in their efforts to stop the massive government bailout.

Many groups that would traditionally fight such a massive outlay of taxpayer funds to irresponsible businessmen were sitting this one out, on the sidelines. Others would actually support the Republican administration's efforts. The diffidence of many of our usual allies was striking.

Much of the recalcitrance from right-of-center organizations seemed to be driven less by principle or substantive policy analysis than by a reluctance to challenge a Republican president—even one who had been a great disappointment on the key issue of fiscal restraint. Were some more concerned with maintaining a relationship with the Republican White House than promoting the principles of limited government? We did not know.

Another problem is that it is much easier to pick sides—Democrat or Republican—and go along with whatever the leaders say. This is a simpler path than trying to think through each issue based on facts and principles. The more years one spends in Washington, the more tempting this path of least resistance looks. Plus, there are a lot more jobs for party loyalists than there are for those of us who are constant thorns in the side of the establishment because we have principles—as if that's a bad thing.

Some free market grassroots groups were conflicted, holding public debates within their own organizations in an attempt to maneuver around various relationships with the Bush administration, politicians in Congress, candidates, and financial interests. They used the same flawed logic many on Capitol Hill used to convince themselves to support this giant government power grab: We must do something to address this crisis. This legislation is something; therefore, we must do this.

Days prior to the vote, FreedomWorks delivered our letter of opposition to the Hill—a “key vote notice.” This is a powerful tool in the arsenal of grassroots groups. Organizations like ours issue these on almost all major pieces of legislation. They outline our argument for or against a bill and let the members of Congress know we will track their votes and let all of our members know exactly how they voted. It's one of the ways we help our members hold their representatives accountable and, we think, make our democracy function better by increasing transparency.

We were alarmed by how few of our erstwhile allies issued similar statements. Shortly before a vote there is usually a flurry of such letters, and it is usually many of the same groups taking the same position. We saw far more letters on far less significant bills.

The usually reliable Heritage Foundation ended up endorsing the TARP legislation. On September 29, 2008, Heritage vice president Stuart Butler and former attorney general Ed Meese coauthored a brief entitled: “The Bailout Package: Vital and Acceptable.” “The constitutional questionability of some provisions is worrying
²³
, as is the centralization of power,” the authors argued. “Nonetheless, the situation is so grave that we must take unusual measures now and accept some negotiated arrangements that remain very troubling, provided they are limited in extent and time and are not accepted as a permanent part of our government.”

Perhaps some found the words of the Heritage Foundation in favor of the bailout more persuasive than our words against it.

Other groups decided not to get involved. How they could claim to be staunch defenders of limited government and not get involved was beyond us. But what surprised us the most, along with the Heritage Foundation's endorsement, was the endorsement of the House bill by Americans for Prosperity (AFP), an organization whose Web site claims they “engage citizens in the name of limited government and free markets.”

AFP released the following statement on the Economic Emergency Stabilization Act (EESA), the bailout bill that included TARP:

AFP R
ELUCTANTLY
S
UPPORTS
EESA

The Emergency Economic Stabilization Act is far from a perfect bill, although some of the worst aspects of earlier drafts have been removed, including the so-called affordable housing trust fund, the say-for-pay rules, and proxy access provisions. Still, the EESA does nothing to address the causes of the current crisis and it carries a frightening risk of permanently increasing the role of government in the economy, which could lead to worse market distortions and future crises. We shudder at the thought of Congress and bureaucrats controlling our country's credit markets. Interest group politics could be injected into every aspect of economic life. . . . The current crisis, however, is grave. There were other options that deserved greater consideration, but the choice today is the EESA or inaction, and inaction is not a good option
²⁴
.

It was one of the strangest, most intellectually tortured endorsements we have ever seen released by a self-described free market organization. While Americans for Prosperity's endorsement of the bill helped provide the political cover Republicans would need to switch their no vote to a yea, the statement was at least prescient. The legislation has failed to address the fundamental problems responsible for the crisis. In fact, at best, the program is a poor attempt to hold harmless bad actors accountable and delay the necessary corrections the economy requires. And the frightening risk of expanding the government's control of the economy has proved to be very real. The bailout program continues, and the Treasury Department has virtually unlimited discretion in its allocation of these funds.

The long, lonely campaign, first against the GSEs, then the housing bailout, and ultimately the Wall Street bailout, revealed just how few friends the cause of liberty actually enjoys inside the Beltway when it really matters. At each step there were fewer and fewer with us in Washington. But a growing, soon-to-be Tea Party movement had been awakened that would result in more allies than we had ever dreamed possible.

In the days leading up to the final House vote, many friends and fellow travelers in the free market movement—businessmen, Republicans, and alleged limited-government conservatives—all went out of their way to scold us for our philosophical intransigence. It was as ironic as it was frustrating to hear “free marketeers” lecture us on the importance of the bailout. Many of these same people worked for organizations that for years made their living by holding politicians' feet to the fire to make them take the “tough” vote for freedom. Yet when Congress was poised to vote on perhaps the most significant expansion of government power we may see in our lifetimes, some chose the easier path, the path of appeasement.

What good are principles if you can ignore them or alter them or bend them just a little to accommodate a difficult decision? Sometimes the principle of the matter demands that you stand up when no one else seems to want to do it. In times of crisis, when the details are in dispute or even unknown, values, principles, and an unbending understanding of markets matter more, not less. Principles matter most under the most challenging of times, and principles matter most particularly when they are unpopular or inconvenient.

SETTLING ACCOUNTS

U
NFORTUNATELY, WE ARE ONLY
beginning to understand how much was lost due to the Wall Street bailout. This massive intervention into the economy has fueled a big-government mentality that has continued through to the new Obama administration, which has proposed trillion-dollar budget deficits as far as the eye can see, massive “stimulus” spending packages, and a major intrusion into the health care market. The government remains a major shareholder of General Motors, and more recently appointed two members to the board of AIG, a private company.

Whatever one might have thought of the proposed use of extraordinary and unchecked executive authority, the actual implementation of the Troubled Asset Relief Program by both the Bush and Obama administrations is now giving every advocate of limited government permanent indigestion. Americans for Prosperity, which initially supported the TARP, has since removed any evidence of that position from its Web site and now rails against government bailouts along with the majority of Americans.

T
EA
T
IME

W
HEN
T
REASURY
S
ECRETARY
P
AULSON
first announced the White House bailout plan on September 22, 2008, Matt Kibbe was quoted in
Politico
predicting that the “grassroots reaction is visceral
²⁵
and going to be big.” The prediction turned out to more right than we could have hoped or planned for at the time.

But when we first opposed the TARP legislation, we had the terrible feeling of lonely martyrs fighting for an antiquated ideology of dead men—an ideology that had been conveniently embraced during good times but was now to be replaced with a pragmatic modus operandi of doing something, no matter what that “something” happened to be. Being a lonely martyr is a bad strategy—the last possible strategy—and it comes with an awfully dark feeling to know you are going to lose a fight you can't possibly afford to lose. But we marched on with the company of the few allies willing to step in front of the Treasury's runaway freight train.

Despite our hopes that grassroots citizens could rise up and stop this policy malfeasance, the speed with which Treasury Secretary Hank Paulson, Representative Barney Frank, and Speaker of the House Nancy Pelosi hoped to ram the bailout through Congress left us pessimistic that opponents had time to mount an effective opposition.

But then our phones started lighting up with calls from outraged activists across the country. Delay was our immediate goal, as it would allow for more transparency and clarity about the proposed actions contained in the evolving—and murky—legislation. The Treasury Department and the Democratic leadership in Congress were moving quickly, before grassroots opposition could potentially kill the bailout.

At FreedomWorks, our online team worked overtime to build a new grassroots protest site at NoWallStreetBailout.com to channel taxpayer anger back to politicians inside the Beltway. In just a few days, the Web site's petition gathered more than sixty thousand activists—a ready and willing Internet army set to mobilize against the Paulson bailout. Our full network of hundreds of thousands of activists had kicked into gear as well. Hundreds of volunteer team leaders across the country set up meetings with their local congresspeople and senators and started phone trees with their local grassroots networks.

Inside the Beltway, we were working with our allies on the Hill to come up with constructive alternatives and amendments, but we needed more time. The political process is at best a blunt instrument for use in healing an ailing economy, and it is typically true that good public policy will be ignored until absolutely every other option is taken off the table. Our goal was to kill the bad idea first—an indiscriminate bailout that rewarded risky, sometimes dishonest, and immoral behavior—to force government to prudently address the real threats faced by capital markets, the banking industry, and the entire economy.

A few stalwart fiscal conservatives in Congress also bravely stepped up and stood against the plan to socialize major Wall Street investment banks, led by Rep. Mike Pence of Indiana. Pence had come out against the plan early, arguing that “economic freedom means the freedom to succeed
²⁶
and the freedom to fail. The decision to give the federal government the ability to nationalize almost every bad mortgage in America interrupts this basic truth of our free market economy.” At the time he stood nearly alone among his colleagues, and he took tremendous heat for his principled stand, but he was quickly joined by other principled members including Jeb Hensarling, Marsha Blackburn, Jeff Flake, and Tom Price in the House; and Jim DeMint and Jim Bunning in the Senate.

The Friday before the first House vote, the
Wall Street Journal
reported that “lawmakers say they have received hundreds of calls
²⁷
and e-mails in recent days, almost uniformly against the idea of giving the government the power to buy billions of dollars in distressed assets to keep the financial system afloat.” Before the first vote in the House on Monday, FreedomWorks staff had delivered tens of thousands of petitions to congressional offices. Members reported that phones were ringing off the hook, and opposition was virtually unanimous.

All of this was encouraging, but as involved as we were, we had no idea just how big, and how visceral, opposition to the bailout actually was in America. Grassroots activism was beginning to take on a life of its own. People were getting up off the couch, pushing away from the dinner table. It was time to stop yelling at the TV. It was time to do something.

On the Monday morning before the first House vote, Dick Armey delivered a long, thoughtful letter to each House member. It read, in part:

The difficult question each of you faces today is simply this: Do you believe that the political process, having produced many of the perverse incentives that resulted in our economy's current predicament, can solve these underlying distortions by essentially doing more of the same? I believe the answer to this question is unequivocally NO.