Constitutionality of Bailout Law is Questioned
Some conservative and libertarian groups maintain the $700 billion bailout law is an unconstitutional delegation of authority to the executive branch.
The theory could soon be tested, the New York Times reports. A group known as the FreedomWorks Foundation said it plans to file a lawsuit challenging the law. It distributed a memorandum to Congress on Thursday arguing that “when Congress delegates so much authority to the executive branch with so few rules to guide its discretion, Congress unconstitutionally transfers its lawmaking power to the executive.”
The group claims the bailout bill is different from other grants of authority upheld by the U.S. Supreme Court. “As far as we can tell, Congress has never delegated so much power to an executive agency with so little to constrain the agency’s discretion,” the memo says.
Robert Levy, chairman of the libertarian group the Cato Institute, makes a similar argument. “The federal government has no constitutional authority to spend taxpayers’ money to buy distressed assets, much less to take an ownership position in private financial institutions,” he writes at the Cato Institute website in an article first published in Legal Times. “And Congress has no constitutional authority to delegate nearly plenary legislative power to the Treasury secretary, an executive branch official.”
Some law professors say the U.S. Supreme Court is unlikely to agree. Harvard law professor Laurence Tribe told the New York Times that the Supreme Court has approved broad delegations of authority in recent cases. As an example, he cited the authority granted to the Environmental Protection Agency under the Clean Air Act.