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01.01.2009 0

Bailout needs “pay to play” protection to avoid scandal

  • On: 01/21/2009 11:29:49
  • In: Economy
  • By Greg Schmid

    Government intervention is at the root of the current economic scare, and a continued policy of intervention is to throw fuel on the fire. As the new administration plots an unalterable course to massive intervention in free market economics, in a plan to save us from ourselves, there is a general sense of resignation that generations of subversion of free market principles have left the American way just one more crisis away from extinction.

    There is also a reasonable suspicion among Americans that all of this is spurious; a crisis manufactured to manipulate an election and to then justify a huge injection of cash into the hands of new corporate syndicalists. It is true that bailout payments offer corporatist proponents of the messianic regulatory state a political “new deal.” Taxpayers’ bailout money may well be converted to political war chests, and used to bankroll what would be characterized a “pro-democracy” movement to impose a neo-progressive agenda of taxation, regulation, and social control on Americans.

    Will the taxpayer be forced to dig his own grave, then lie down in it? Will we be forced to pay into a system of redistribution of wealth designed to send over a trillion dollars to beneficiaries who can ultimately donate back a portion of that money as a quid pro quo to the politicians who arranged it for them? The new administration should realize that the surest way to lose the ground it has gained is to scandalize the bailout by allowing the appearance of “pay to play” corruption to undermine public confidence in the good intentions of big government, and lay it bare as the self-funding arm of a cynical inside-outside strategic agenda.

    It is not enough to make the bailout open; it must be clean as well. There is a very simple way to keep it clean. The Congress can legislate, or the President, though his the treasury department can, by executive or agency order, follow the example of a Clinton era policy started with SEC Rule G- 37, and enacted in 8 states and many major cities. “Pay to Play” restrictions on political kickbacks would require those who make the choice to seek and accept government bailout funds to refrain from funneling that money back to their political cronies.

    “Pay to Play” bailout protections would make companies that get bailouts agree, as a condition to the bailout, not to make political donations until they have paid back every dime of the taxpayers’ money. Such rules would also close loopholes that allow clever circumvention techniques to launder taxpayer’s money though conduits into candidates and political parties; PACs, major stockholders, officers, directors, key employees, and their family members are often no more than strawman donors to political campaigns. The right to make campaign donations does not include doing so on the taxpayer’s dime.

    If the bailout stakeholders are not forced to agree to forgo making “pay to play” kickbacks, then politics as usual will doom the bailout, and the administration that owns it. Every dollar of bailout money that makes its way (directly or indirectly) into the next election is another nail in the coffin of the new administration, and the new president would do well to nip “pay to play” in the bud before he is held to account for the scandals that would otherwise ensue on his watch.

    Greg Schmid is an ALG News Bureau contributor.

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