The revelations about IRS targeting of tea party groups, despite repeated denials by the Administration, and of manipulation of talking points about Benghazi, again despite repeated denials by the Administration, raise the question of what institutions should be used to stop government – especially executive branch – wrongdoing. This is a complicated issue, but I thought I would discuss the issue a bit.
The original Constitution employed the following political checks – good faith on the part of the executive branch (including prosecuting executive wrongdoers) combined with the check of legislative impeachment. This might have made sense in the beginning, with a small government, but certainly it does not work adequately for a large government.
One additional check in the early days involved lawsuits by individuals against government officials for wrongdoing. For example, if a government official searched or seized your property, one could sue him for trespass or some other relevant tort. The individual could defend on the ground that his action was legally authorized. But if it was not, then one might have a tort suit against him for damages to be paid out of his pocket. This provided government officials with incentives to conform to the law.
Unfortunately, over time the movement for big government made up immunity for government officials that prevented them from having to pay damages so long as they had a reasonable basis in the law for their actions.
Over at his Economics One Blog, (link no longer available) economist John Taylor discusses a recent speech by the former Wells Fargo Chairman and CEO Dick Kovacevich, who explains how he was forced to take TARP funds by U.S. Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke:
In his speech, Kovacevich first described how he and the other bankers were told at that meeting that they had to accept the funds. He then paused and said to the Stanford audience: “You might ask why didn’t I just say no, and not accept TARP funds.” He then explained: “As my comments were heading in that direction, Hank Paulson turned to Chairman Bernanke, who was sitting next to him and said ‘Your primary regulator is sitting right here. If you refuse to accept these TARP funds, he will declare you capital deficient Monday morning.’ This was being said when we were a triple A rated bank. ‘Is this America?’ I said to myself.”
At that time Wells Fargo was in process of acquiring Wachovia and such a declaration would have killed the deal. According to Kovacevich: “It was truly a godfather moment. They made us an offer we couldn’t refuse.” It was also truly a deviation from the principles of economic freedom, such as those I have highlighted in my book First Principles—predicable policy, rule of law, reliance on markets, limited scope for government. One can debate whether those deviations were appropriate, but they were clearly deviations.
During the question and answer period after his talk, I asked Dick Kovacevich why more business people were not speaking out on this important issue. He explained how he had in fact waited a long time after he left Wells Fargo before speaking out because he did not want to risk some kind of retribution. He said he thought many others had a “fear” of speaking out.”
Obviously, this is reprehensible. It clearly indicates how big government can stifle freedom. But the more interesting question for me is whether these are impeachable offenses.