On April 15, tax day, most Americans feel a little violated as the government peeps into their most private affairs to see what’s taxable. The Obama administration views such transparency as a one-way street.
Government secrecy has become the norm under this administration, particularly when it comes to the financial bailout. Exhibit A is a gag order preventing banks from divulging how they performed on the Treasury Department’s financial “stress tests.” These tests were instituted Feb. 25 to gauge the liquidity of the country’s 19 biggest banks and determine whether they could survive another dramatic economic downturn. Federal officials told the bankers to keep mum about how stressed out the tests say their institutions are.
Thus far, the U.S. government has spent, lent or committed $12.8 trillion to the financial rescue. That tab works out to $42,667 per person, or $130,600 per tax filer. It is almost as much as an entire year’s worth of gross domestic product, which last year was $14 trillion. The government refuses to inform the public - or even Congress - where all the money is going. At a Senate Finance Committee hearing March 31, Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP), admitted that he couldn’t tell senators where the nearly $3 trillion already spent on bailouts went.
Basic measures of spending accountability have not been provided. The government has not even required all banks receiving taxpayer dollars to consistently explain how the money is spent. Assistant Secretary for Financial Stability Neel Kashkari, the Treasury official known as the “bailout czar,” who should be overseeing the payouts, is refusing Mr. Barofsky’s requests for this information.
Mr. Barofsky, a former prosecutor, a Democrat and a donor to President Obama’s presidential campaign, is critical of Treasury’s stonewalling and general cluelessness about where the money is going. Noting that such large amounts of money given out “will inevitably attract those seeking to profit criminally,” he warns, “If, by percentage terms, some of the estimates of fraud in recent government programs apply to the TARP programs, we are looking at the potential exposure of hundreds of billions of dollars in taxpayer money lost to fraud.”
The Obama administration’s gag order on banks is part of its practice of keeping Americans in the dark about what their government is doing with trillions of their hard-earned dollars. Preventing banks from discussing the Treasury stress test is dangerous because the test is designed to measure their capital needs during the recession. Refusing to disclose where the banks stand stokes fear that the financial situation is worse than was thought. Uncertainty is certainly bad for markets. Trampling on businesses’ right to inform shareholders and customers of their condition is also antithetical to free enterprise.
With trillions of their dollars being thrown to the wind, taxpayers have a legitimate interest in knowing how it is being spent, or misspent. Mr. Obama repeatedly promised greater transparency in his administration, but these sweet nothings fly in the face of how oversight agencies are performing on his watch. The public wants to know what Treasury is doing. To be fair, it’s possible that Mr. Obama has no idea, either.