October 06, 2008

Will the Court Go Along With the Bailout?

“Handing off huge gobs of power to the executive branch…can raise issues of unconstitutional delegation of authority,” writes a recent law.com article. But most experts are betting that the courts will stay out of it. Roger Pilon of the Cato Institute
“says that some of the as-yet undefined details of the plan might arguably interfere with contractual or property rights. But in that area, as with its court-stripping provisions, the bailout plan is likely to survive Court scrutiny, Pilon guesses. "If the Court starts intruding on this solution, it will undermine confidence in the plan…and the Court is unlikely to want to take on that responsibility.’”
In the 1930s, the Supreme Court initially resisted Franklin Roosevelt’s federal aggrandizement of power (e.g. striking down part of the National Industrial Recovery Act in Schechter v. United States) and later ratified New Deal policy in the 1940s. It is too early to know if the Court will remain silent on the biggest bailout package – and one of the largest interference by the feds in the free market – in history.

But should a carte blanche be given to the executive this time, in light of the current situation? Ever since its initial resistance, the Court has largely rubberstamped government interventionism in the economy unabatedly for 70 years. As New York Law School professor David Schoenbrod notes, “the looseness of the Court's nondelegation doctrine, plus the gravity of the situation, would make the Court unlikely to intervene.”

However, one must wonder how the new powers vested in Paulson and the executive will play out on the Court’s docket. As we blaze through the 21st century, is a resurgence of the courts’ check on economic non-interventionism nothing more than a pipe dream?

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