The Public Policy

TARP and the Demands of Democracy

What are bailout recipients doing with the money they've received? The Obama administration doesn't want you know.

By 9.10.09

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The concern among the American people about the size and cost of government continues to grow, and the Obama administration is beginning to experience a crisis of confidence doubtlessly owed to its aggressive expansion of the federal bureaucracy and deepening of the national debt. Members of Congress -- who have the power of the purse in our constitutional democracy -- know that we answer, ultimately, to the voters for the way that taxpayer dollars are spent. That's why Congress created the Office of Special Inspector General for the Troubled Asset Relief Program (SIGTARP) to monitor the way Treasury spends the $700 billion bailout program.

Back in April, Congress learned that Treasury pursued a formal opinion from the Office of Legal Counsel of the Department of Justice in an effort to limit SIGTARP Neil Barofsky's independence and bring him under the direct supervision of Secretary Geithner. In July, the House Committee on Oversight and Government Reform heard testimony from SIGTARP Barofsky that highlighted the Treasury Department's failures to protect taxpayers from the kind of fraud that undermines the American people's faith in their government.

Americans instinctively love their country, but they don't really like their government. Indeed, James Madison's classic line from Federalist 51 -- "if men were angels, there would be no need for government" -- presupposes the impossibility of a perfect government and leaves the people with, at best, the hope of a good government.

By good government, Americans mean a government limited in size and honest in action. Without independent oversight of the administration, the taxpaying public would have no guarantee that their hard-earned money -- reluctantly forfeited in the form of taxes to support the work of government -- is well spent. Americans have no patience for wasteful government, and they are acutely aware that the less transparent the government, the worse it will be.

When President Obama came to office, he promised an administration with "the highest degree of accountability and transparency possible." As a presidential candidate, Mr. Obama railed against the Bush Administration's "failure to track how the money has been spent."

Yet Americans are learning from SIGTARP Barofsky that they will not be told what TARP recipients are doing with bailout money, how much their substantial investments are worth, or how their money is being invested. The shroud of secrecy that the Obama administration has attempted to place over its bailout efforts is a brazen act of executive usurpation and political doublespeak. It is also an affront to democracy itself.

For democracy is the expression of popular sovereignty, namely, that the only good governments are those that reflect the will of the people and the rule of law. Exit polls from last year's election demonstrated that the people elected Barack Obama, in part, because they wanted more accountability and transparency in Washington. They wanted a change from secret deals to spend billions of tax dollars without any thought of a crushing national debt. They wanted the windows of government thrown open so that liberty's fresh air could reinvigorate the nation, economically and politically.

On too many fronts the Obama administration has broken its promise of change. Attempts to limit the autonomy and authority of SIGTARP are but another instance of the brass-knuckled politics that the Senator from Chicago brought with him to 1600 Pennsylvania Avenue. Neil Barofsky has done a great service to his country by refusing to roll.

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About the Author

Rep. Darrell Issa (R-Calif.) is Chairman of the House Committee on Oversight and Government Reform.