While the EPA is busy punishing commercially competitive sources of energy, the Department of Energy under President Obama has been acting like the world’s worst venture capital fund — picking winners and losers, but mostly losers, by spending recklessly on uncompetitive alternatives. For evidence, look no further than Solyndra, a solar-panel company that received $500 million in stimulus-funded loan guarantees. Last month, Solyndra filed for bankruptcy and laid off its employees.
The federal government’s job is to make and enforce sensible rules of the road, so that markets are fair, transparent, and competitive. When bureaucracy is empowered to reward politically well-connected firms at the expense of economically competitive ones, this weakens the rule of law, wastes taxpayer dollars, and makes sustainable job creation that much harder.
Another example: We have seen a lot of damaging economic adventurism in the area of financial services lately. The Troubled Asset Relief Program was supposed to be confined to a narrow emergency and used to avoid precisely the kind of situation I described at the beginning of this speech — an economic calamity in which politicians promising security in return for a loss of freedom would do enormous damage to the cause of liberty.
Needless to say, it was disappointing when the Bush administration approved the use of TARP funds for the bailouts of General Motors and Chrysler. This entrenched the idea that TARP could be used as a slush fund for just about any kind of economic intervention, regardless of the fact that the original bill charged the program to, quote, “purchase . . . troubled assets from any financial institution.”
That was bad, but the greater damage came later, when the Obama administration used that bailout to trample the rights of Chrysler’s secured bondholders — including state pension funds — in order to give politically favored groups a better deal than they were entitled to receive under the bankruptcy law, making it less likely that institutions tasked with safeguarding people’s life savings will invest that money in ways that create jobs in the United States.
The Dodd-Frank financial services overhaul only made matters worse. Dodd-Frank involves radical changes to financial regulation — changes that will affect every feature of our financial-services industry, increase the power of current financial regulatory agencies, and create new ones.
For example, the Federal Deposit Insurance Corporation may now take control of any financial institution if a panel of regulators under the Treasury secretary sees a danger of “systemic risk,” which is up to regulators to define. Moreover, smaller institutions do not receive the protections given to big firms under this law, resulting in unequal treatment as well as higher borrowing costs compared to their larger competitors. Dodd-Frank promotes the rule of bureaucrats to our economic detriment, inviting political corruption while further degrading self-government.
The next case involves the troubling overreach we’ve seen lately from this administration’s appointees to the National Labor Relations Board, or the NLRB. The most notorious case involves Boeing, which the NLRB is suing over its decision to locate a new factory in South Carolina instead of union-friendly Washington State. The board’s actions are threatening hundreds of jobs.
But this isn’t the only example of the board’s overreach. Early in his administration, the president promised labor leaders that he would work to pass a card-check bill to make union-organizing easier. But just like cap-and-trade, card-check failed in Congress — so the NLRB simply issued new union-election rules that would, in the words of one former board member, “achieve the primary objectives of [card check] by administrative rule, without the need for tough congressional votes,” unquote. Again, with agencies like this, what do you need Congress for?
More generally speaking, we should not be surprised to find organized labor leading the charge for more bureaucratic discretion in federal rulemaking. An agency that is free to broadly interpret its statutory authority is one that can unilaterally broaden its size and scope – and in the process, it can increase the size and influence of the public-sector unions to which its employees belong.