One must work to get behind the import of an enabling act, because such an act is invariably, and intentionally, short and vague. It intends to grant much, and to tell little. This is certainly true of the three acts compared here: the German Greek bailout legislation, Paulson’s 2008 draft legislation, and Hitler’s 1933 enabling act, all reproduced below in English translation. Nevertheless, it is a revelation—if an appalling one—to peer into the enabling act laboratory.
By John Ryskamp
As we shall see, these three acts are closely modeled on each other. Indeed, the authors of the German bailout legislation seem to have had Paulson’s proposal close by, because the two enabling acts are remarkably similar. It remains for history to tell us whether or not U.S. Treasury officials actually had a hand in drafting the German legislation.
I. UNITARY POWER AS AN ECONOMIC FACT—ITS FOUR HANDMAIDENS
Health and welfare regimes hand over almost all power over almost all facts, to the political system; there are few individually enforceable rights. Rights regimes do the opposite—there is little discretion within the political system, and rights are nearly absolute.
Health and welfare regimes tend toward enabling acts because there are few individually enforceable rights. This tendency extends to the formal attributes of the political system itself: it is impossible for the individual to enforce the disposition of powers in a health and welfare regime. This vastly facilitates the enabling act, setting unitary power on its course by bringing its four indicia into play. These four actors we discuss here.
The enabling act changes the nature of the political system which puts it into effect, which is why such political systems are said to have “committed suicide” by passing enabling acts. It is important to keep this in mind, because, on their face, enabling acts seem often only amend the previous political system; the political system remains, and indeed enabling acts make much of the supposed preservation of the existing political system. They also make much of dealing only with specific problems over a specified period. But various traps, sprung along the way to enforcement, lead to unitary power and the discarding of government. People wonder how a simple remedy led to such profound dislocation.
A closer look reveals that the intention of enabling acts is to entirely displace the previous political system as they proceed—indeed, to read politics and law entirely out of the definition of power. Enactment is only the first step, not the last step, of an enabling act. There is more to the “act” than legislating an enabling act.
In the promulgation and enforcement of an enabling act, four actors come into play to lead the society to unitary power: justification of power, unification of power, preservation of power and restoration of power. These four facts are the economic indicia of unitary power, and they are what enabling acts set in motion. As they take over, politics and law become vestigial and anachronistic, and are repeatedly derided as such by the unitary power regime.
II. THE FIRST ECONOMIC ACTOR ARRIVES ONSTAGE--JUSTIFICATION OF POWER
To some, it is unclear how a system of defined powers, such as the Weimar Republic or France’s Third Republic, gave way to unitary power. However, under health and welfare regimes, the economic play is nearly over even before the curtain rises on the enabling act. Health and welfare regimes already grant so much power to the political system, that enabling acts seem more a simple power grab between power centers than a principled enactment. Result? There isn’t much protest by the public against enabling acts, and enforcement of them provokes only minimal resistance. In this respect, the “waters” have been tested beforehand, to make sure that an enabling act is politically possible.
By the time an enabling act is politically possible, no justification is felt by its authors to be necessary, and there is usually no or little justification in the acts themselves. There is, for example, no “wherefore” in Paulson’s 2008 bailout proposal. The only word ever used to justify the act is “necessary.” The equivalent provision in Hitler’s 1933 enabling act is that the enabling act is justified because “it has been established that it meets the requirements for legislation altering the Constitution.” Indeed, justification is often relegated to the title, if it is anywhere in the act at all—Paulson’s proposal is simply titled, “Legislative Proposal for Treasury Authority to Purchase Mortgage-Related Assets.” Hitler’s title refers to the need to “remedy the distress.” No further mention is made of this “distress,” and that is intentional—the term is designed to be universally “understood,” and, for that reason, incontestable. It is certainly not litigable.
The German Greek bailout legislation follows this well-worn path of justification. Few words are devoted to justification, even under the section “Rationale.” Indeed, the “Rationale” repeats Hitler’s self-ratifying language: “Germany adopts with the law at hand the necessary measures on a national level in order to be able to give rapid aid to the Hellenic Republic.” The odd superfluity of this language is easily explained: as in the case of Hitler’s language, it is simply fiat. There is reference to an “emergency” and to the “preservation of the stability of the monetary union’s solvency.” However, we are never told what “emergency,” “preservation,” “stability,” or “solvency” mean. This truncated justification just meets the political necessity—it concedes no more than is necessary to turn aside enforcement problems. Too much justification undermines the enabling, because it starts to define what is NOT part of the act. The enabling is presumed to be justified by the emergency, and the emergency to call for the act. The constitution plays no role, and there is political consensus—questioning the “obvious” is an attack on the society.
Thus, there is a “toehold” in justification, but the implication of this is that as the enabling act is enforced, enforcement becomes its own justification. That is, the tendency is toward unitary power—and that in fact is the justification. Power is justified because it is power, and its exercise is the proof: we shall return to this little formulation.
The enabling act is forgotten—the power remains.
III. UNIFICATION OF POWER—THE PLOT UNFOLDS
The canonical enabling act provision is the handing over of one governmental power to another—legislative power to the executive, executive power to the legislative, judicial power to the executive, the government to the “state,” or to one leader. The lack of definition, and explicit handing over of powers, are two sides of the same coin. To retain elaborate definitions of terms is to restore powers—it contravenes the whole purpose of the enabling act, and arouses suspicion as to what is being given up, and why. Enabling acts mean to end debate, not to provoke it; they claim to be the outcome of all debate, so further “debate” is sociopathological. That is why the end product is called unitary power: in the view of its advocates, power has, as its only component, itself. It is a matter of bringing legal formulations in line with that conception. For authors of enabling acts, what such acts enable, is unitary power. The explicit handing over of power, in combination with the lack of definition of terms, means that in operation the enabling act actively resists and repels definition and the “powers” of the former political system lose definition. The way to unitary power is made clear. In the end, the political system is so deformed that no charge of vagueness can be asserted against an enabling act.
The classic example is Hitler’s enabling act of 1933, which explicitly handed legislative power to the “government,” which was in turn nowhere defined because the political “consensus” knew what that word meant. Paulson’s 2008 bailout proposal is much less explicit on this point, but the grant of legislative authority by the legislature in the Paulson case is carried out through a paucity of defined terms: only three are defined. Indefinite terms are characteristic of enabling acts—Hitler’s 1933 act contains NO definitions of terms. There can be no charge that the enagling act has violated the law, when the terms are too vague to be compared to the law. And indeed, the adopted version of Paulson’s bailout legislation has proved to be effectively nonlitigable. If there has been anything which has given the German government heart to pursue its enabling act, it is the fact that one is in full force in the United States.
The German Greek bailout legislation—which is two pages long—contains no definitions, which means that power over everything pertaining to the subject—the “take-over of warranties”—is turned over to the ministry of finance. It remains only, in enforcement, to expand this incontestable “take-over.” That is exactly what happened in the case of Hitler’s enabling act.
IV. PRESERVATION OF POWER—THE OBEISANCE
While it purports to be objective, the German bailout legislation enacts a sleight of hand, under the cover of preserving formalities, which turns over the judicial power to the executive power. This is in line with the maneuvers of other enabling acts.
Paulson’s 2008 enabling act made explicit the unification of the judicial and executive powers: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” Two things about this provision are not often noted: 1) the “decisions” referred to include what are otherwise judicial decisions; and 2) “the Secretary” makes all other executive decisions, not just those reserved to the Treasury. Thus, this provision is the establishment of the “Treasury” as the unitary power, or, in short, the merging of the executive power into the unitary power.
Nevertheless, note that the Paulson act is promulgated as a Treasury program. “The Secretary” is the unitary power referred to, but formally the program is put forth as a Treasury program. So the act seems to preserve the nature, or power, of the Treasury, and by extension, of the executive and even of the judiciary. Again, however, the lack of definition of terms leads to the questions: what judiciary? what executive? Litigants are lost in the haze of enabling act vagueness—and lose their cases.
Contrast this with Hitler’s enabling act, which does not, either explicitly or implicitly, take power from the judiciary. In fact, the judiciary is never mentioned, so the act seems to say nothing about the judicial power and so it seems to preserve the judicial power. Hitler had no intention of ruffling German bourgeois feathers by an explicit assault on the judiciary; in this respect, he was much more cautious than Paulson. However, Hitler had a dodge: he simply did not bring his victims through the Constitutional judicial process. He either evaded the judicial process altogether and carted people off to concentration camp without further process, or he had them hailed before his kangaroo court, the People’s Court. For the “Treasury,” Hitler substitutes the “government”—formerly the executive power. Again, this “promulgation” assumes what it purports to establish (and all definitions which may be pertinent thereto).
Of course, the implication is always that the legislature, which merges the powers, can restore them again. But again, that contradicts the merger in the first place—it undercuts the merger of power if restoration of power is somehow looming somewhere as a possibility. The process of enforcing the enabling act is designed to show that this possibility does not loom somewhere.
Legislative power is reduced to consultation, and there is no legislative remedy. This is Paulson’s formulation: “Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.” Hitler’s enabling act dispenses entirely with the consultative function, which is consistent with his use of the term “government” as the power: there is no other power to consult.
The German Greek bailout enabling act language makes much of its own preservation of the political system’s powers, but that is a smokescreen. In truth, the unitary power is the “federal ministry of finance.” The toothless consultative function—behind which power is unified—seems to have been adapted closely from Paulson’s formulation: “the budget committee of the German Bundestag has to be informed, unless due to compelling reasons an exception is imperative. The budget committee of the German Bundestag is furthermore to be informed quarterly on the taken-over warrantees and their proper usage.”
Now we come to the crucial shift in the German bailout legislation: the “basis.” The “argument” of the act is that some power (the enabling act itself) can be not of the constitution, but nevertheless provide a “basis” for a power which is not in the constitution. It is that which is “based” in the constitution. What is lacking, of course, is the definition of the “basis.”
Oddly enough, this sleight of hand is the reason enabling acts are upheld, and why this one will likely be upheld. Here is the argument: the act is “based” in the constitution but it is not part of the constitution. Nevertheless, the basis is contained in the act, and so what the act carries out does not arise from the constitution. The act can be promulgated because it is promulgated: that is the rationale. Simple bootstrapping. The point is that it lets the constitution off the hook and renders it immune to judicial process; the constitution is respected by being ignored and inaccessible. This supposedly reflects the political “consensus.” And the courts do not mind, because no constitutional question arises under the enabling act. Why? Because the constitution has been written out of the act. It has always been too much to expect the populace to see through this “wishing away” of governmental powers, and enabling acts pass muster without too much demur.
Thus, the “basis” turns the judicial power over to the executive power. Look for “mediators” or “boards”—established by and answerable to the executive, and with coercive powers—to replace the judicial power in Germany.
The Paulson legislation is a self-professed enabling act: it simply denies judicial review. The curious “basis” provision of the German Greek bailout legislation is the analogue to those provisions of Hitler’s enabling act stating that the act does not “affect the institutions of the Reichstag and the Reichsrat. The rights of the President remain undisturbed.” The other powers are rendered “invisible” by unitary power. Since there are no definitions, it is never clear whether this is a policy, a goal or a finding of fact. Is it a means or an end? There is nothing to contest, which, again, is why there is no need to refer to the judiciary in Hitler’s enabling act or the German Greek bailout legislation. And government is gone.
German hostility to the judiciary reasserts itself after eighty years of dormancy.
V. THE FINAL ACT—RESTORATION OF POWER
Sunset provisions of enabling acts are a politically necessary contradiction in terms; thus, their terms are awkward and embarrassing. One questions the need for the enabling act, if for some reason there is a need to put a termination date into it. Surely, a change in the facts would simply render an enabling act moot, without the need for a sunset provision. What exactly is being terminated?
Paulson’s enabling act has a very awkward sunset provision: “The authorities under this Act, with the exception of authorities granted in sections 2(b) (5), 5 and 7, shall terminate two years from the date of enactment of this Act.” However, these “authorities” extend not only over vast assets seized, but also, because the terms of those sections are poorly defined, it is not clear what powers inhere in the Treasury despite the sunset of the law, and so, what power is or even can be restored to the legislative, judicial or even executive.
Hitler’s sunset provision is equally vague: “This law becomes effective on the day of its publication. It becomes invalid on April 1, 1937; it also becomes invalid if the present Reich Cabinet is replaced by another.” Again, what can become “invalid” which is not clearly defined in the first place?
The sunset provision of the German Greek bailout legislation is lost in the sunset glow of vagueness. The grant of power is supposedly only for two years, but it is “for credits to the Hellenic Republic for emergency measures that are necessary to preserve the financial stability of the monetary union’s solvency.” It is uncertain what triggers the end of the legislation, or what constitutes an end to the legislation. This is because it is unclear whether the union’s “solvency” is dependent on the “emergency measures,” or the other way around. In this legislation, “solvency” is used neither as a fact nor a goal. The term “emergency measures” is not used as a fact or a goal, either. Instead, these two terms are defined in terms of each other, merge with each other, without formal definition. This is of a piece with the intent of enabling acts to dispense with definitions. The result is that there is no clarity as to what ends at the end of two years.
The intent of sunset provisions is not to restore powers. The intent is to bind powers to what the enabling act has brought about—the tendency toward unitary power. That is exactly what happened to the “sunset” provision of Hitler’s enabling act.
Unitary power as such has not previously been identified as an economic concept. Economists—ill-equipped to deal with it—shunt it to politics or law whenever it appears on the economic stage. However, the ground for its identification now, has been well laid. It is in essence the analytical framework not only of Piero Sraffa’s articles on Mussolini and the banking system, but also, of The Eighteenth Brumaire of Louis Bonaparte—itself an echo of Napoleon’s own (or his handlers’ own) enabling act. And so democracy in Germany comes to an end—for the second time.
In the Eighteenth Brumaire, Marx writes: “Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.”
VI. GERMAN GREEK BAILOUT LEGISLATION
Law to create the enabling basis for the take-over of warrantees in coherence to emergency measures necessary for the preservation of the stability of the monetary union’s solvency.
(Law to preserve the stability of the monetary union)
Paragraph 1 Warrantee enabling
- The federal ministry of finance is enabled to take-over warrantees up to an amount of 8,4 billion euros in the first year as well as up to an amount of further (xx) billion euros in the following two years for credits to the Hellenic Republic for emergency measures that are necessary to preserve the financial stability of the monetary union’s solvency.
- A warrantee is to count against the maximum amount of this enabling to the extend, in which the federation can be utilized. Interest rates and costs are not to be counted against this scope of enabling.
- Before the take-over of this warrantees according to point 1, the budget committee of the German Bundestag has to be informed / briefed, unless due to compelling reasons an exception is imperative. The budget committee of the German Bundestag is furthermore to be informed quarterly on the taken-over warrantees and their proper usage.
Paragraph 2 Entry into force
Paragraph 1 taking effect at the day after proclamation.
The law as aforesaid is hereby engrossed. It is to be proclaimed in the Federal Law Gazette.
Berlin, the
Rationale:
After the declaration of the heads of the states of the member nations of the Euro monetary union region from March 25, 2010, the member nations of the monetary union region have agreed upon the conditions of the financial help that the Hellenic Republic will receive in case of need to secure the financial stability in the entire Euro-monetary union.
With the declaration of the ministers of finance of the Euro-monetary union region from April 11, 2010, the member nations of the Euro monetary union region have agreed upon financial help through coordinated, bilateral credits that will be bundled to a help package in favour of the Hellenic Republic under the mandate of the European Commission together with financial aids by the International Monetary Fund. The credit programme of the Eurostates extend over a period of three years and will provide in the first year up to (30) billion euro to cover the financial requirements of the Hellenic Republic.
Subsequent to the declaration of the ministers of finance of the Euro-monetary union region, Germany adopts with the law at hand the necessary measures on a national level in order to be able to give rapid aid to the Hellenic Republic. Germany’s attributable quota is determined according to the particular quota of the states of the Euro monetary region on the shares of the capital of the European central bank. Germany’s quota among the 15 Eurostates (without the Hellenic Republic) amounts to 27,92%.
It applies for this warrantee enabling the usual rule of abatement / allowance according to budget law. Before the first-time take-over of a warrantee according to this law and subsequent quarterly, the budget committee of the German Bundestag is to be informed.
Translation by Lars Schall
VII. HITLER’S ENABLING ACT
Law to Remedy the Distress of the People and the Empire
The Reichstag has enacted the following law, which is hereby proclaimed with the assent of the Reichsrat, it having been established that the requirements for a constitutional amendment have been fulfilled:
Article 1
In addition to the procedure prescribed by the constitution, laws of the Reich may also be enacted by the government of the Reich. This includes the laws referred to by Articles 85 Paragraph 2 and Article 87 of the constitution.
Article 2
Laws enacted by the government of the Reich may deviate from the constitution as long as they do not affect the institutions of the Reichstag and the Reichsrat. The rights of the President remain undisturbed.
Article 3
Laws enacted by the Reich government shall be issued by the Chancellor and announced in the Reich Gazette. They shall take effect on the day following the announcement, unless they prescribe a different date. Articles 68 to 77 of the Constitution do not apply to laws enacted by the Reich government.
Article 4
Treaties of the Reich with foreign states which affect matters of Reich legislation shall not require the approval of the bodies of the legislature. The government of the Reich shall issue the regulations required for the execution of such treaties.
Article 5
This law takes effect with the day of its proclamation. It loses force on 1 April 1937 or if the present Reich government is replaced.
VIII. PAULSON’S 2008 BAILOUT PROPOSAL
Legislative Proposal for Treasury Authority to Purchase Mortgage-Related Assets
Section 1. Short Title.
This Act may be cited as ____________________.
Sec. 2. Purchases of Mortgage-Related Assets.
(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.
(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
(1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties;
(2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts;
(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
(4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and
(5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.
Sec. 3. Considerations.
In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--
(1) providing stability or preventing disruption to the financial markets or banking system; and
(2) protecting the taxpayer.
Sec. 4. Reports to Congress.
Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.
Sec. 5. Rights; Management; Sale of Mortgage-Related Assets.
(a) Exercise of Rights.--The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.
(b) Management of Mortgage-Related Assets.--The Secretary shall have authority to manage mortgage-related assets purchased under this Act, including revenues and portfolio risks therefrom.
(c) Sale of Mortgage-Related Assets.--The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.
(d) Application of Sunset to Mortgage-Related Assets.--The authority of the Secretary to hold any mortgage-related asset purchased under this Act before the termination date in section 9, or to purchase or fund the purchase of a mortgage-related asset under a commitment entered into before the termination date in section 9, is not subject to the provisions of section 9.
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time
Sec. 7. Funding.
For the purpose of the authorities granted in this Act, and for the costs of administering those authorities, the Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under chapter 31 of title 31, United States Code, are extended to include actions authorized by this Act, including the payment of administrative expenses. Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Sec. 9. Termination of Authority.
The authorities under this Act, with the exception of authorities granted in sections 2(b)(5), 5 and 7, shall terminate two years from the date of enactment of this Act.
Sec. 10. Increase in Statutory Limit on the Public Debt.
Subsection (b) of section 3101 of title 31, United States Code, is amended by striking out the dollar limitation contained in such subsection and inserting in lieu thereof $11,315,000,000,000.
Sec. 11. Credit Reform.
The costs of purchases of mortgage-related assets made under section 2(a) of this Act shall be determined as provided under the Federal Credit Reform Act of 1990, as applicable.
Sec. 12. Definitions.
For purposes of this section, the following definitions shall apply:
(1) Mortgage-Related Assets.--The term “mortgage-related assets” means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.
(2) Secretary.--The term “Secretary” means the Secretary of the Treasury.
(3) United States.--The term “United States” means the States, territories, and possessions of the United States and the District of Columbia.
