In our free economy, the government can be compared to a referee in a sporting event. Its role is to ensure the rules are followed and enforce penalties if they are not. However, because of unprecedented federal intervention in private companies, the government is now both a referee and a player. This situation makes fair competition impossible and dramatically alters the free-market entrepreneurial underpinnings of our nation.
The Treasury Department has recently used funds from the Troubled Asset Relief Program (TARP) to purchase ownership stakes in financial institutions, banks, and now auto manufacturers—rather than to purchase “toxic assets” which was Congress’s intention when the program was created. With the president acting as the de facto CEO of these companies and Congress behaving like a 535-member board of directors, every business decision now carries added political weight.
Along with some of my Republican colleagues, I have introduced the Government Ownership Exit Plan Act (S. 1242). This bill would prohibit the Treasury Department from purchasing additional ownership interests in private companies through TARP, and it would require Treasury to sell existing ownership interests acquired through TARP by July 1, 2010. If the Treasury Secretary can demonstrate that assets will significantly appreciate in value, the Treasury Department may hold them for up to an additional year. Any revenue from the sale of these assets would be used to pay down the national debt.
Government ownership of private firms undermines free and fair competition and puts taxpayer money in the hands of bureaucrats and elected officials who are ill equipped to make business decisions without added political calculus. My bill would establish an exit strategy for divesting federal ownership interests in private companies, while protecting taxpayers from further intervention resulting in unfair competition. I already have the support of a number of my Senate colleagues and I will continue to urge others to support this common sense effort.