Even in a downturn, the American economy is a dynamic, resilient force that is envied all over the world. Built on free market principles and fair competition, our economy rewards innovation, hard work, and discipline. Unfortunately, the federal government is taking rapid, unprecedented steps to exert control over large components of the private sector at a time when we can least afford it.
Despite President Obama’s repeated statements about not wanting to run banks, financial institutions, or auto manufacturers, government intervention in the free market is growing at an alarming rate. The federal government currently holds various ownership stakes in over 600 private companies. This degree of government intrusion opens the door to coercion of private businesses by the government, competitive disadvantages, and perhaps most alarmingly, government bureaucrats and politicians making business decisions.
Recognizing the importance of free and fair markets, citizens are growing increasingly skeptical of the government’s expanding role in the economy. A poll released earlier this year by the independent public opinion research firm Rasmussen Reports indicates that 80 percent of Americans want the government to sell its stake in General Motors as soon as possible. In the same survey, 71 percent of respondents said they would favor a proposal to force the government to sell its stakes in banks as well.
It is time for Congress to lay out a roadmap for the government’s withdrawal from the ownership stakes it has acquired through the Troubled Asset Relief Program (TARP). I have introduced a bill along with a dozen of my colleagues, the Government Ownership Exit Plan Act, which would prohibit the Treasury Department from purchasing any new ownership interests in private companies. This legislation would also require the Treasury Department to sell off its existing ownership interests within one year of becoming law, with a possible one year extension if Treasury can show that such a delay is in the best interest of the taxpayer. Equally important is a provision that requires any revenue generated from the sale of these assets be used to pay down our dangerously high national debt — instead of being used as a slush fund for the Treasury Department to recycle to other financial institutions.
Last year, Congress passed the original TARP with assurances that the money would be used to purchase the “toxic” mortgage-backed assets that were sinking the balance sheets of financial institutions and strangling the free flow of the credit markets. Instead, the Treasury Department opted to use the money to purchase large stakes in banks, financial institutions, insurance companies, and General Motors and Chrysler. Since it now owns these companies, the administration is wasting no time in making decisions for them, including the removal of senior management.
When businesses are privately owned, market conditions dictate decisions, products, and goals. Government “managers” are not driven by a profit motive, but by politics and ideological agendas. Government “managers” will also have an impact on what kind of cars General Motors and Chrysler will build, regardless of whether American consumers want to buy them. When the government has an ownership stake in private businesses, it’s difficult to totally insulate against political interference. Members of Congress are already behaving as though they sit on the board of directors for government owned-companies, with influential members lobbying to save plants in their own districts.
Americans are rightfully skeptical of the government’s ability to use their tax dollars wisely in the private sector. Too few bureaucrats and members of Congress have the private sector experience or business acumen that defines the most successful entrepreneurs. Politicians in Congress will have a hard time resisting the urge to use government control of private businesses to protect their own political interests, and historians know that once a government program takes shape, it almost never goes away.
Our economy is built around the idea that businesses compete against each other under fair and impartially enforced rules. However, government-ownership skews the playing field, with the government acting not only as the referee, but also as a player. Clearly, the businesses with government backing have a significant competitive advantage over private businesses that did not need a bailout. This kind of activism will only reward future bad behavior at the expense of successful, innovative companies.
Business owners both large and small should be concerned about the growing role of the federal government in the economy. The U.S. Chamber of Commerce, the world’s largest business federation, has publically endorsed my common sense legislation and I appreciate the grassroots support of individual business owners as well. It has also received the support of Citizens Against Government Waste, Americans for Tax Reform, the National Taxpayers Union, and the American Conservative Union. While the Treasury Secretary recently testified that he has no such plan to divest government held assets in private companies, Americans are ready to see the government divest its ownership, and my bill is a way to do so while protecting taxpayer interests.
Recent events give all Americans the opportunity to consider the role the federal government should have in our economy. Actions speak louder than words, and the Obama administration’s continued steps into the private sector carry much more weight than the president’s assurances that he does not want to run private businesses. Americans are growing increasingly frustrated with government ownership of private businesses, and there is a real sense that without action soon, this cycle of bailouts and marching orders from Washington could extend well into the future. The Government Ownership Exit Plan offers a way for Congress to pull the government out of the private sector and put our nation back on the road to real recovery, and I believe the time to act on it is now.