Congress and the Bailout: Why Americans Distrust Government

The bailout bill “ended up attached to a measure that extends benefits to people suffering from depression and is named after a lawmaker who died in a crash.” Most people do not know what is in the bill. Congress may prefer it that way.

Editor’s Note: Thanks to Susan McGuire Smith, Esq. for her extensive research that is the basis for this article.

The bailout bill has been of interest to most Americans for various economic reasons. At the same time, Congress is given record low approval ratings by the American public even before the recent economic mess surfaced.

No doubt, there are a variety of reasons for the low approval ratings and the lack of trust in our elected representatives. Earmarks, campaign contributions that have the look and feel of bribes to those of us who are not elected representatives, and a lack of ethics all play a role in our lack of trust in the legislative branch. Perhaps the economic bailout action that may eventually be taken by Congress will have an impact on the low approval ratings. But, at the same time, the bill itself highlights some of the problems with how Congress operates on a day-to-day basis.

Many of the bill’s provisions will be unknown to the American public until, perhaps, some time in the future. Modern legislation is often a way of passing numerous laws that hide the content of new legislation under the radar of most Americans. Earmarks, controversial legislation, or just helping out lobbyists and campaign contributors can all be addressed in one bill–especially one that is likely to be popular and is likely to get passed quickly because of a pressing need.

For history buffs, it may be of interest to compare the modern bailout bill to another historic bill that changed American history. It is about two pages long and actually addresses the substance and content of the Bill’s title. At a minimum, it is a more transparent form of government that we have now.

Federal employees may have a particular interest in some aspects of this bailout bill. Anyone who follows the ebb and flow of politics and government will also find it of interest. Here are several observations on this legislation.

The Senate passed the bailout bill earlier this week by a vote of 74-25. When first looking at this bill, it did not appear to be the correct document. The purpose of this bill, according to the initial text, is “To…require equity in the provision of mental health and substance-related disorder benefits under group health plans, to prohibit discrimination on the basis of genetic information with respect to health insurance and employment, and for other purposes.”

Since the purpose of the bill, according to most news reports, is to alleviate the financial crisis, the purpose of the bill sounds phony unless Congress is assuming the entire financial mess is a mental health problem of some kind.

As it turns out, this lengthy document (about 500 pages), has as its first substantive section “Emergency Economic Stabilization”–no apparent relationship to mental health issues. It is formally known as the Paul Wellstone Mental Health and Addiction Equity Act of 2007.

Political science students may recall that the U.S. Constitution requires revenue bills to originate in the House of Representatives. This bill is coming from the Senate. Not wanting to let a detail like the American Constitution get in the way of progress or the ability of Congress to change the structure of the federal government by passing a new law, Congress apparently just decided to call the bailout bill something else…and then proceed to pass a revenue bill originating in the Senate contrary to our Constitutional requirement which states that “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”

Perhaps the Senate as an institution has a sense of humor. As noted by the Wall Street Journal  “the bailout ended up attached to a measure that extends benefits to people suffering from depression and is named after a lawmaker who died in a crash.”

Having quickly dispensed with the inconvenience of a Constitutional requirement, the Bill gets down to the changes this bill will impose on the American populace. Here are a few of the provisions that may interest those who are employed in Uncle Sam’s civilian army.

First, the Secretary of the Treasury will have direct hire authority “with respect to the appointment of employees to administer this Act.” That should eliminate the interference with the government’s human resources overseer, the Office of Personnel Management. (See page 8 of the Bill)

Second, The Secretary of the Treasury will have the authority to enter into contracts, including contracts for services. (Also on page 8 of the Bill).

Third, the bill will ensure that the Federal Acquisition Regulations do not stand in the way of the new powers of the Secretary of the Treasury. The Bill states that “the Secretary may waive specific provisions of the Federal Acquisition Regulation upon a determination that urgent and compelling circumstances make compliance with such provisions contrary to the public interest.” (See page 23)

Fourth, the Secretary of the Treasury will issue regulations that determine ethics and conflicts of interest that should happen to arise in the implementation of administering the hundreds of billions to stabilize the American economy. (See page 24)

Fifth, the law would set up a “Special Inspector General for the Troubled Asset Relief Program” with authority to conduct, supervise, and coordinate audits and investigations on the sale of assets by the Secretary of the Treasury.

Sixth, the law apparently sends a signal to the Securities and Exchange Commission to end the “mark to market” accounting requirement for valuing assets. There has been increasing criticism of the mark to market system with arguments that it has accelerated the economic crisis but the SEC has not taken public action to suspend this system. (See page 88)

Seventh, FDIC insurance for bank deposits will increase to $250,000 from $100,000 until December 31, 2009. (See page 91)

Eighth, the bailout bill starts addressing energy improvement and extension with the ‘‘Energy Improvement and Extension Act of 2008”. (page 113)

Ninth, the ‘‘Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008” begins on page 310.

Tenth,  The Secure Rural Schools and Community Self-Determination Act of 2000 begins on page 344.

Eleventh, the Secretary of Agriculture is told by Congress to secure payments for states and counties containing federal land. Page 352)

Twelfth, Congress dedicates special projects on federal land (page 364)

Thirteenth, Congress addresses disaster relief for Hurricane Ike (page 394)

Perhaps the bill is a good deal and necessary for America. It may or may not pass in its present form in the House of Representatives. The bailout bill has also been passed by the House and signed by the President. We are obviously dealing with a problem that affects all of us but there is little doubt that Congress sees an opportunity to stuff legislation that is likely to get passed with numerous other provisions that have nothing to do with the economic bailout.

You can read the full text of the bill and reach your own conclusions about its various provisions.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47