Franklin Delano Bush
Byline: THE WASHINGTON TIMES
In 2004, President Bush spoke eloquently about his vision of creating an ownership society - consisting in large measure of free-market ideas, such as Social Security private accounts and health-savings accounts. Those ideas, vigorously opposed by liberal Democrats, died in Congress. Fast forward to today, Mr. Bush's final months in the White House. He has joined with Treasury Secretary Henry Paulson in instituting a neo-socialist version of the ownership society - using powers contained in the just-passed $700 billion mortgage-bailout bill to buy a stake in American banks regardless of whether they want it or need it.
The Paulson plan, purportedly crafted in order to save capitalism, is one of the most massive expansions of federal power over the economy since President Franklin Delano Roosevelt and the New Deal. Mr. Bush says the massive market intervention would be limited and temporary, and Treasury Department officials say the plan includes features to encourage banks to buy out Uncle Sam's share as quickly as possible. But there is plenty of reason to be skeptical of such assertions, particularly given the degree of enthusiasm both Democrats and Republicans have shown for such intervention.
Congressional Republican leaders (showing the political skills that have put their party in a position to lose significant numbers of seats in both houses of Congress for the second consecutive time) were praising the new federal powers over the banking system. So, too, were prominent Democrats, including Sen. Barack Obama, Sen. Charles Schumer and Senate Banking Committee Chairman Chris Dodd - all of whom endorsed the plan Mr. Paulson apparently strongarmed banks into accepting last Monday. To his credit, Sen. John McCain opposes this monstrosity - although he voted for the bailout bill that made the bank-buyout plan possible.
To anyone who believes in safeguarding our economic freedoms, what happened with Mr. Paulson's investment scheme should serve as a cautionary tale about what occurs when legislators give sweeping new powers to government bureaucrats: They use them. During congressional debate over the bailout, Mr. Paulson told lawmakers that the administration did not want to put government capital into banks because it seemed too much like nationalization and he was a believer in the free market. Moreover, as The Washington Post noted, if he had called attention to the provisions in the bill that made cash injections an option, stockholders in banks could have concluded that the government was about to wipe them out, as it had investors in mortgage firms Fannie Mae and Freddie Mac and insurance giant American International Group, driving stock prices down and making the need for a bailout all the more urgent. …