Michele Bachmann, the conservative Republican Congressman from Minnesota, has gotten into the heads of the left-wing blogosphere. Yesterday was the completely phony attack on Bachmann’s “armed and dangerous” comment, in which her metaphor for outrage was twisted into a supposed call to arms.
Today brings another twisted attack. Numerous blogs, including Swampland, Washington Monthly, and others, are claiming that Bachmann misconstrued (a) whether the Treasury Department has the constitutional authority to engage in the TARP program, and (b) the Chinese call for a new “reserve currency” with a call for a new currency. Typical of the comments to these posts was this classic left-wing smear:
I never thought I’d see someone more stupid than Sarah Palin, but I think Michele Bachmann has captured that crown.
The TARP program constitutionality issue is not new, having been raised at the time of the original TARP bailout, and was not invented by Bachmann. Numerous legal commentators have raised the issue. One of the key issues is whether Congress, in effect, has given the Treasury Department legislative power beyond that permitted under the Constitution. While the weight of opinion seems to be that the program is constitutional, this is not a frivolous (or “stupid”) concern. The blogs attacking Bachmann on this issue have illustrated their own lack of understanding of the issue.
The “new currency” versus “new reserve currency” issue reflects that it is the blogs and their commenters who don’t understand, and who obviously haven’t read the actual statement by the Chinese. In fact, the Chinese did call for the creation of a new currency, which would be an amalgam of numerous national currencies, to be used as a reserve:
The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.
The Chinese made clear that they were calling for a new currency, a so-called “super-sovereign” currency, to replace the dollar at the world’s reserve currency:
Though the super-sovereign reserve currency has long since been proposed, yet no substantive progress has been achieved to date.
The effect of having a super-sovereign currency would be that all nations, including the United States, would have to use this currency for international transactions. This would have been clear to the bloggers if they had consulted readily available explanations of what a reserve currency is. The Financial Times got it right:
China’s proposal would expand the basket of currencies forming the basis of SDR valuation to all major economies and set up a settlement system between SDRs and other currencies so they could be used in international trade and financial transactions.
The Wall Street Journal also go it right:
China called for the creation of a new currency to eventually replace the dollar as the world’s standard, proposing a sweeping overhaul of global finance that reflects developing nations’ growing unhappiness with the U.S. role in the world economy.
So yes, there would be a new currency used for international transactions. It would not replace the dollar completely, but it would represent a new method of conducting international transactions.
By attacking Michele Bachmann as stupid, the left-wing bloggers and commenters proved their own stupidity.
UPDATE: In a post titled Geithner ‘open’ to China proposal, Ben Smith points out some comments by Secretary of Treasury Timothy Geitner which expressed interest in the Chinese proposal, which Geitner viewed as creating an evolution in the international banking system rather than a new currency. Like the bloggers quoted above, Geitner apparently had not read the Chinese proposal prior to commenting (emphasis in quotation mine):
Geithner, at the Council on Foreign Relations, said the U.S. is “open” to a headline-grabbing proposal by the governor of the China’s central bank, which was widely reported as being a call for a new global currency to replace the dollar, but which Geithner described as more modest and “evolutionary.”
“I haven’t read the governor’s proposal. He’s a very thoughtful, very careful distinguished central banker. I generally find him sensible on every issue,” Geithner said, saying that however his interpretation of the proposal was to increase the use of International Monetary Fund’s special drawing rights — shares in the body held by its members — not creating a new currency in the literal sense.”We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union,” he said.
The neutral and dispassionate Dump Michele Bachmann website joins in the Michele Bachmann Derangement Syndrome.
UPDATE No. 3: Now I get it. It’s all a vast right-wing echo chamber conspiracy, according to Matthew Yglesias: Right-Wing Echo Chamber Fomenting Panic About Fake Sino-Russian Global Currency Plan. Sorry Matt, it’s not. Read the Chinese statement. The goal is to replace the dollar with a new reserve currency, because the Chinese are worried that Obama is destroying the viability of the dollar as a common currency for international transactions. Don’t blame the messenger.
More Michele bashing over at Fire Dog Lake, while American Power takes down the dog attack on Michele.
UPDATE No. 4: The issue keeps going and going, with this Bachmann proposed legislation prohibiting the use of any new international currency, which of course has caused much teeth gnashing by the usual suspects, like Matthew Yglesias. See my post, Will Someone Please Tell Tim Geithner To Read The Document, for an explanation of why Bachmann correctly sees the danger of a new international reserve currency.
UPDATE No. 5: George Will articulates the argument that TARP is unconstitutional:
It is high time Americans heard an argument that might turn a vague national uneasiness into a vivid awareness of something going very wrong. The argument is that the Emergency Economic Stabilization Act of 2008 (EESA) is unconstitutional.
By enacting it, Congress did not in any meaningful sense make a law. Rather, it made executive branch officials into legislators. Congress said to the executive branch, in effect: “Here is $700 billion. You say you will use some of it to buy up banks’ “troubled assets.’ But if you prefer to do anything else with the money — even, say, subsidize automobile companies — well, whatever.”