The current financial crisis is a matter not only of economics, but of journalism, as
well. As reporters and commentators scramble to shed light on the meltdown—its causes
and its effects, in both the short term and the long—they’re doing so in the shadow of
an administration that has declared its desire for more opacity, not less, in its future
financial dealings. The secrecy inherent in Hank Paulson’s proposed bailout plan should
raise serious questions among people who believe, as we do, that the free flow of
information is vital for our democracy.
In light of all that, we asked Gary D. Bass, executive director of OMB Watch—a
nonprofit government watchdog organization dedicated to promoting open government,
accountability, and citizen participation—for his perspective on journalism’s stake in
the votes Congress will be casting on Friday. His thoughts are below.
— The Editors
Only a few days ago, Treasury Secretary Henry Paulson asked Congress to pass legislation that would allow his department to use $700 billion to purchase mountains of bad debt. That’s 5 percent of the nation’s total annual economic output, or to put it another way, that’s even more than what has been spent on the war in Iraq. The magnitude of the funds requisitioned is matched only by the administration’s requested level of unchecked power and opacity in how it would execute this historic market intervention.
We do not pretend to know whether a bailout is needed or, if one is needed, what size and scope it should be. But most assuredly, whatever solution is pursued should include vigorous, timely, and accessible disclosure of all details surrounding any government decisions in response to financial market problems. Paulson’s initial request to Congress would have hidden the actions of the Treasury not only from the sight of the public, but also from Congress, the courts, and the media. Sec. 2(b)(2) of Paulson’s legislative text would give his department authority to enter into contracts “without regard to any other provision of law regarding public contracts.” Sec. 8 would make “[d]ecisions by the Secretary pursuant to the authority of this Act non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” Paulson has agreed to modify these provisions, but their proposal is a clear indicator that the administration has its sights set on virtually unchecked authority—much like what happened after the 9/11 terrorist attacks.
The type of opacity sought by Paulson should be especially troubling to journalists and other members of the media. More than anyone, journalists understand the power and importance of information. From repeated experience, journalists know that often, when government throws up walls of secrecy, that is done to protect not the people, but rather ineptitude, corruption, conflicts of interest, and questionable decisions on the part of the government. Time and time again, journalists have fought past government secrecy to bring to light occurrences of mismanagement, fraud, and abuse of power. The current debate over solutions to the fiscal meltdown on Wall Street should be no different, both in the process Congress uses to develop a solution and in the implementation of the solution itself.
Congress would be wise to ensure that significant oversight and accountability structures be put in place in whatever solution they adopt, including disclosure requirements that make information available to the public and the media. If Paulson or his successor can make unilateral decisions about contracts, for example, that power will likely raise conflicts of interest that will remain unknown without journalistic scrutiny. The firms most able to help the government dispose of toxic assets are likely the same companies that are seeking the government bailout, and the public has a right to know which firms are benefiting and why. Congress must be wary of ceding authority to an autonomous actor with no assurances of safeguarding the public from conflicts of interest.
Journalists know that secrecy worsened this crisis, and as such, they have a responsibility to help ensure that the solution Congress adopts avoid additional secrecy. Otherwise, the taxpayers could end up spending $700 billion just to see the same disasters repeated.