TOO SMALL DEMOCRACY, NOT TOO BIG GOVERNMENT, IS THE PROBLEM

Robert Reich - I wish conservatives would stop complaining about big government and start worrying about the real problem small democracy. I wish we'd all worry more about our incredible shrinking democracy.

It seems as if more and more decisions that should be made democratically are being shunted off somewhere to a few people who make them in back rooms. Which programs should be cut, which entitlements pared back, and what taxes raised in order to reduce the long-term budget deficit? Hmmm. Let's convene a commission and have them decide.

Commissions are a default mechanism when politicians want to hand off difficult issues to "experts." But reducing the long-term budget deficit has almost nothing to do with expertise. It's about our nations' values and priorities. Nothing could be more central to the democratic process. . .

The notorious Troubled Assets Relief Program began with a virtual blank check from Congress. Treasury officials then secretly decided which companies were to receive hundreds of billions of dollars. Why these particular entities were chosen and not others remains a mystery. For months, the Treasury didn't even disclose the identities of the major banks that giant insurer AIG repaid with its bailout money 100 cents on each dollar AIG owed them.

The Federal Reserve, meanwhile, has gone far beyond its traditional role of setting short-term interest rates. It has bought up massive amounts of debt mortgage debt, Treasury bills, and debt instruments emanating several public agencies, many of them supporting a wide range of private entities. No one outside the Fed knows the ultimate beneficiaries of all this government backing, the criteria used by the Fed for making these commitments, or even how much debt the Fed is buying.. . .

The same pattern is evident on other issues. Congress can't decide whether or how to limit the pay of financial executives. So where does the issue end up? The Securities and Exchange Commission and the Fed both say they're going to look at whether pay levels are appropriate. The House and Senate can't agree on what to do about climate change. Who decides? The Environmental Protection Agency concludes it has authority to regulate carbon emissions under the Clean Air Act.. . .

A big piece of the problem is this: Washington is now so overrun by lobbyists representing moneyed interests that it's become almost impossible to make policy in the open. If the Treasury and Fed tried to decide publicly which industries and firms should get hundreds of billions, they'd be inundated. Wall Street lobbyists are blocking real financial reform. The energy industry has filled the House's cap-and-trade bill with special subsidies and exemptions. Big Pharma and Big Insurance would have killed off the health-care reform if they hadn't been bought off. When it comes to the long-term deficit, Congress is incapable of acting because so many special interests have their hands out.

But the answer isn't to give up on democracy. Back-room policy making can succumb to private interests just as easily as lobby-infested legislatures (much of the public suspects the Treasury of being too cozy with Wall Street as it is).