It sparked little comment but the most important aspect of Treasury Secretary Henry Paulson’s recent decision to change the focus of the $700 billion Wall Street bailout was what that decision revealed about that bailout and indeed all recent efforts by the federal government – Spending billions of tax dollars on bailouts isn’t about restoring the private economy, it’s about expanding the public sector.
Things aren’t likely to change in the Obama administration. Ilya Somin at The Volokh Conspiracy has a superb post explains why this is the case. Here’s the key graph:
“In earlier posts (e.g. – here and here) I have emphasized the risk that the combination of economic crisis and unified Democratic control of Congress and the White House would lead to a vast expansion of government. It looks like key Obama advisers and congressional Democrats are thinking along the same lines. As Obama Chief of Staff Rahm Emanuel puts it, the crisis is ‘an opportunity to do things you could not do before . . . You never want a serious crisis to go to waste.’ The WSJ article from which the quote comes makes clear that the ‘things’ Emanuel has in mind are government policies that ‘pick winners’ by subsidizing particular industries on a massive scale – as Congress is already doing with the finance industry, auto industry and others (HT: David Boaz).”
Read Somin’s entire post, including all of the links it includes.
