There has been a bit of a discussion in the blogosphere over whether Treasury’s actions under the TARP in bailing out the car industry should be thought of as anti-democratic. Robert Reich argued this Wednesday and Gordon Smith and David Zaring have addressed the issue—here and here—as well.
I have struggled to follow the discussion. Congress passed the original bailout bill and that created whatever authority it created. Treasury either does or does not have power under the bailout bill to act, but that authority arose in a standard act of our democracy.
Congress subsequently considered a specific bailout bill for the auto industry and failed to enact that legislation. What does that do to the legal authority of Treasury to act under TARP? Absolutely nothing, say it again. An effort to enact a bill that fails can’t have the effect of altering preexisting legislation. The only way for Congress to alter prior legislation is to pass new legislation. The current Congress may believe that the prior legislation doesn’t reach the case that the proposed legislation purports to address, but they can’t implement that understanding of the prior law without enacting new legislation. This is true, as is the case here, when it is precisely the same Congress acting in both contexts, that is to say, when the same Congress has passed the original legislation and has subsequently attempted to pass new legislation to address the purported failure in the first legislation. The failed legislation is just another version of post-enactment legislative history.
Treasury either does or does not have power to act under the original bailout bill as to the car industry. The fact that Congress considered passing legislation directly addressing the car industry doesn’t alter the prior legislative act. All of that is noise. Failed legislation doesn’t alter passed legislation and it is that passed legislation that establishes what Treasury can and cannot do under the TARP.