Adventures in the zone of twilight: Separation of powers and national economic security in the Mexican bailout

Yale Law Journal

Volumn 105, Issue 5, 1996, Pages 1311-1345

  Covey, Russell Dean ^a  

^a NONE

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EID: 0040370315     PISSN: 00440094     EISSN: None     Source Type: Journal    
DOI: 10.2307/797177     Document Type: Article

References (192)

1. See David E. Sanger, International Package of Aid Could Reach About $50 Billion, N.Y. TIMES, Feb. 1, 1995, at A1, A16.
2. The IMF originally pledged $17.8 billion in loans. Canada agreed to deliver $2 billion. Id. The IMF contribution was increased subsequently to $18.9 billion. See The Mexican Peso Crisis. 1995: Hearings Before the Senate Comm. on Banking, Housing, and Urban Affairs, 104th Cong., 1st Sess. 601, 619 (1995) [hereinafter Mexican Peso Crisis] (testimony of Lawrence Summers. Undersecretary of the Treasury). As of July 14, 1995, Mexico had also received $2.75 billion from the Inter-American Development Bank and the World Bank. Id. at 635. The $10 billion in BIS loans remains available. Unlike the loan packages extended by the IMF and the United States, the BIS has refused to make monies available for anything other than short-term loans, and Mexico has preferred not to draw on those funds. Id.
3. U.S. and International Response to the Mexican Financial Crisis, 1995: Hearings Before the House Comm. on Banking and Financial Services, 104th Cong., 1st Sess. 87, 93 (1995) [hereinafter Hearings Before the House Comm. on Banking, Feb. 9, 1995] (testimony of Robert Rubin, Secretary of the Treasury). The proceeds from the issuance of any debt securities are supposed "to facilitate the redemption, refinancing or restructuring of Mexico's short-term debt obligations." Guarantee Agreement Dated as of February 21, 1995 Among the United States Department of the Treasury, and the Government of the United Mexican States, State Dep't No. 95-135, available at 1995 WL 425201.
4. Technically, the aid package included "swaps," not loans. Swaps are agreements between governments to exchange IOUs of national currencies that give each partner the right to draw down on those currencies at any time. Practically speaking, the swap agreements function like loans in that Mexico receives dollars up front and faces an obligation to repay them at a later date. Though the United States holds a "certificate of indebtedness" from Mexico that it is free to cash in at any time, the purpose of the arrangement is to allow Mexico to gain access to dollars now in exchange for Mexico's promise to repay later. See Medium-Term Exchange Stabilization Agreement Between the United States and Mexico (Feb. 21, 1995), available at 1995 WL 425203.
5. The administration vigorously disputed this characterization, primarily on the grounds that Mexico is obligated to pay interest on all funds borrowed from the ESF and that the loans have been "secured" against Mexico's income from its oil reserves. Despite Mexico's paper guarantees and the potential for full repayment, taxpayer dollars were put at risk. Were this not true, Mexico could have acquired the loans on private markets without the need for U.S. government intervention. Additionally, even where no actual funds have been committed, as with the extension of loan guarantees, traditional budget-keeping methods require that Congress make the requisite authorizations, since they may require outlays from the Treasury at some point in the future. As the Congressional Budget Office has explained: A default on a loan made by the ESF could affect the budget by lowering the amount of collections, primarily interest and fees, that the fund would have otherwise received. . . . [I]f the assisted country could not pay the interest, budgetary outlays would rise because the ESF would not receive collections. If the country defaulted on principal, the assets would eventually have to be written down by the amount of the currency's depreciation, and by any foregone interest, thereby raising future budgetary outlays. If defaults occurred on a large enough scale, the fund would have to either reduce the scope of its operations or seek additional capital. Letter from Rudolph G. Penner, Director, Congressional Budget Office, to Stephen L. Neal, Chairman, Subcommittee on International Trade, Investment and Monetary Policy, U.S. House of Representatives (Apr. 30, 1984), in Exchange Stabilization Fund and Argentina, 1984: Hearings Before the Subcomm. on International Trade, Investment and Monetary Policy of the House Comm. on Banking, Finance and Urban Affairs, 98th Cong., 2d Sess. 15, 17 (1984) [hereinafter CBO Letter].
6. For a discussion of bailout history and policy, see Cheryl D. Block, Overt and Covert Bailouts: Developing a Public Bailout Policy, 67 IND. L.J. 951 (1992). According to Block, a bailout is defined as "a form of government intervention in another market arena." Id. at 955. Though bailouts belong to the same conceptual family as general government subsidies, they provide benefits to a more concentrated group. The focus of a bailout is on saving a particular entity from collapse. Block distinguishes between overt and covert bailouts. The Mexican bailout, in Block's terms, is an "overt" bailout because it takes the form of "direct assistance, loans or loan guarantees." Id. at 968. Covert bailouts, in contrast, are less visible and can be provided in a number of ways, including special tax breaks, trade restrictions, tariffs, and quotas. U.S. intervention in currency markets to prop up the peso would have constituted a type of covert bailout.
7. In the last 25 years, the United States has engaged in a number of large-scale public bailouts. Only one exceeded the magnitude of the $20 billion rescue of the Mexican economy: the $500 billion savings and loan bailout of 1989. The legislative vehicle for the S&L bailout was the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183. The controversial 1980 rescue of Chrysler required the United States to extend a mere $1.5 billion. See COMPTROLLER GENERAL, GUIDELINES FOR RESCUING LARGE FAILING FIRMS AND MUNICIPALITIES, GAO/GGD 84-34, at 19 (Mar. 29, 1984) [hereinafter GAO REPORT].
8. Other large bailouts include the $250 million rescue of Lockheed in 1971, the $2.3 billion rescue of New York City in 1975, and a subsequent $1.65 billion bailout in 1978. Id. In 1984, the federal government orchestrated a $7.5 billion rescue of Continental Illinois, the eighth-largest bank in the nation. Funding was provided through the Federal Deposit Insurance Corporation - which gets its money from insurance premiums paid by private banks - and thus no money was taken from the Treasury. See Peter T. Kilborn, Where the Rescue Money Comes From, N.Y. TIMES, May 19, 1984, at A33.
9. To appreciate fully the scope of the $20 billion Mexican bailout, one need only note that the entire foreign-aid budget passed by Congress for 1996 is only $12.1 billion. See George Moffett, Skeptical Congress Accelerates Foreign-Aid Cuts, Charging Waste and Poor Returns, CHRISTIAN SCI. MONITOR, Nov. 30, 1995, at 4.
10. See George Graham, Republicans to Clinton Rescue, FIN. TIMES, Feb. 8, 1995, at 6.
11. See Nancy E. Roman, Mexico Plan Causes GOP Rift, WASH. TIMES, Feb. 2, 1995, at A1.
12. See President's Statement with Congressional Leaders on Financial Assistance to Mexico, 31 WEEKLY COMP. PRES. DOC. 155 (Jan. 31, 1995) [hereinafter Joint Statement] ("We agree that, in order to ensure orderly exchange arrangements and a stable system of exchange rates, the United States should immediately use the . . . ESF . . . to provide appropriate financial assistance for Mexico. We further agree that under . . . Section 5302, the President has full authority to provide this assistance."). The statement was signed by Newt Gingrich, Speaker of the House; Bob Dole, Senate Majority Leader; Thomas Daschle, Senate Minority Leader; Richard Armey, House Majority Leader; and Richard Gephardt, House Minority Leader. Id.
13. See, e.g., Oversight on the Monetary Policy Report to Congress Pursuant to the Full Employment and Balanced Growth Act of 1978: Hearings Before the Senate Comm. on Banking, Housing, and Urban Affairs, 104th Cong., 1st Sess. 1-2 (1995) [hereinafter Hearings Before the Senate Comm. on Banking, Feb. 22, 1995] (statement of Sen. Alfonse D'Amato);
14. Major Garrett, House Leaders to Allow Debate on Peso Bailout, WASH. TIMES, Feb. 14, 1995, at A1;
15. Rex Nutting, Opponents Try to Stop Mexico Aid, UPI, Feb. 6, 1995, available in LEXIS, News Library, UPI File; Roman, supra note 8.
16. Both the House and Senate passed bills in reaction to the Mexican bailout. Senator D'Amato authored an amendment to prevent the President from using the ESF as he did in the Mexican crisis. However, the measure specifically did not apply to the Mexican bailout. See Jonathan D. Glater, D'Amato Wins an Anti-Bailout Measure, WASH. POST, Aug. 6, 1995, at A17.
17. In July, the House passed legislation to cut off further funding of the Mexican bailout. See House Votes to Block More Mexico Loans, CHI. TRIB., July 20, 1995, at 16. The measure was incorporated from a bill introduced by Representative Bernie Sanders, id., providing that "certain budget authority and credit authority provided to the Exchange Stabilization Fund shall be effective only to the extent provided in appropriation acts." H.R. 867, 104th Cong., 1st Sess. (1995). Earlier, the House approved a resolution introduced by Representative Marcy Kaptur requesting the President to submit information "concerning actions taken through the exchange stabilization fund to strengthen the Mexico peso and stabilize the economy of Mexico." H.R. 80, 104th Cong., 1st Sess. (1995).
18. Similar issues are raised by the President's negotiation of emergency provisions with the Japanese central bank in the event of a Japanese banking crisis. See Keith Bradsher, Fearing Japanese Bank Frailty, U.S. Agrees to Give Future Help, N.Y. TIMES, Oct. 17, 1995, at A1 (describing plan for Federal Reserve to provide money quickly to Japanese regulators if one or more Japanese banks run into trouble and need bailout during trading hours in United States).
19. Cf. Youngstown Sheet and Tube Co. v. Sawyer, 343 U.S. 579, 631 (1952) (Douglas, J., concurring) (noting that President might seize private property and Congress might subsequently ratify seizure, "[b]ut until and unless Congress acted, no condemnation would be lawful"); The Prize Cases, 67 U.S. (2 Black) 635, 670 (1862) (noting that Congress had ratified ex post Lincoln's potentially illegal seizure of foreign warships), discussed in Harold Hongju Koh & John Choon Yoo, Dollar Diplomacy/Dollar Defense: The Fabric of Economics and National Security Law, 26 INT'L LAW. 715, 724 (1992);
20. WILLIAM C. BANKS & PETER RAVEN-HANSEN, NATIONAL SECURITY LAW AND THE POWER OF THE PURSE 134-36 (1994) (discussing relationship between necessity and legality).
21. See 31 U.S.C. § 5302 (1994).
22. 343 U.S. at 634 (Jackson, J., concurring).
23. 31 U.S.C. § 5302(b) (1994).
24. Id. § 5302(a)(1).
25. See Mexican Peso Crisis, supra note 1, at 371 (testimony of Robert Rubin, Secretary of the Treasury). But according to Rubin, only $29.5 billion was "usable." Id.
26. See 31 U.S.C. § 5302(a)(1) (1994).
27. "The Articles of Agreement require the United States to maintain the value of IMF holdings of dollars in terms of the IMF's unit of account (formerly gold, currently, the SDR)." S. REP. No. 698, 95th Cong., 2d Sess. 14 (1978), reprinted in 1978 U.S.C.C.A.N. 2565, 2578. One of the principal obligations was established by Article IV of the amended Articles of Agreement, which requires members to "avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members." S. REP. NO. 1295, 94th Cong., 2d Sess. 6 (1976), reprinted in 1976 U.S.C.C.A.N. 5950, 5955.
28. 22 U.S.C. § 286(o) (1994). Special Drawing Rights (SDRs) are units of account established by the IMF representing the value of a "basket" of currencies designated by the IMF. Countries experiencing current account shortages can borrow foreign currencies from other central banks by depositing or exchanging SDRs in return for those currencies. SDRs that the IMF has allocated to the United States are held in the ESF, which "pays and receives SDR charges and interest and meets U.S. commitments to purchase SDRs from other countries." CBO Letter, supra note 4, at 17.
29. 31 U.S.C. § 5302(a)(1) (1994).
30. Review of Treasury Department's Conduct of International Financial Policy: Hearings Before the House Comm. on Banking, Finance and Urban Affairs, 101st Cong., 2d Sess. 3 (1990) [hereinafter Hearings Before the House Comm. on Banking, Aug. 14, 1990] (discussing amendment to give GAO audit authority over all ESF operations).
31. H.R. REP. NO. 292, 73d Cong., 2d Sess. 2 (1934).
32. S. REP. NO. 201, 73d Cong., 2d Sess. 201, 204 (1934) (quoting H.R. REP. NO. 292, 73d Cong., 2d Sess. 1, 3 (1934)). "It is generally understood that the United States needs this equalization fund in order to compete with a similar fund which Great Britain has and is using." Id. at 201.
33. The ESF originally was established as a temporary fund, authorized for two years with the option of renewal by the President for a third. The Fund was renewed periodically by Congress until 1943. As part of the Bretton Woods Agreements Act of 1945, the ESF became a permanent fund, although its size was reduced by $1.8 billion, which was part of the United States's original subscription to the IMF. See H.R. REP. NO. 629, 79th Cong., 2d Sess. 3 (1945). A 1962 amendment to the Bretton Woods Agreements Act provided that gold or currency purchases could be transferred to and administered by the ESF. Pursuant to the Special Drawing Rights Act of 1968, SDRs were denominated as official reserve assets and obligations, and receipts stemming therefrom were assigned to the ESF. See Letter from Edward S. Knight, General Counsel, Department of the Treasury, to Robert E. Rubin, Secretary of the Treasury, in Mexican Peso Crisis, supra note 1, at 435, 437-38.
34. Gold Reserve Act of 1934, ch. 6, § 10(a), 48 Stat. 337, 341.
35. See Pub. L. No. 94-564, 90 Stat. 2660, 2661 (1976). For a discussion of the nature of U.S. obligations in the IMF, see KENNETH W. DAM, THE RULES OF THE GAME: REFORM AND EVOLUTION IN THE INTERNATIONAL MONETARY SYSTEM 115-72 (1992).
36. S. REP. NO. 1148, 94th Cong., 2d Sess. 9 (1976), reprinted in 1976 U.S.C.C.A.N. 5935, 5943.
37. For a discussion of the background of Nixon's decision to "close the gold window," see United States v. Yoshida International, Inc., 526 F.2d 560, 567-69 (C.C.P.A. 1975).
38. S. REP. NO. 1295, 94th Cong., 2d Sess. 17 (1976), reprinted in 1976 U.S.C.C.A.N. 5950, 5966 (emphasis added). While the prevention of government loan default and the maintenance of stable exchange rates are undoubtedly linked, linkage alone cannot provide sufficient rationale for the expenditure of ESF funds under the terms of § 5302. If it could, ESF funds could be employed for a wide range of purposes nominally linked to the movement of exchange rates. For instance, donations could be made to the PRI, Mexico's governing party, on the theory that a change in governing parties could have dramatic consequences for exchange rates. Such initiatives, however, obviously would exceed the authority of the Secretary of the Treasury.
39. The emergency provisions are contained in 31 U.S.C. § 5302(b) (1994), which reads: "[A] loan or credit to a foreign entity or government of a foreign country may be made for more than 6 months . . . only if the President gives Congress a written statement that unique or emergency circumstances require the loan or credit be for more than 6 months."
40. S. REP. NO. 1295, 94th Cong., 2d Sess. 11 (1976), reprinted in 1976 U.S.C.C.A.N. 5950, 5960.
41. In 1977, the ESF contained approximately $4.0 billion in assets. Id. Major growth in ESF holdings occurred in 1989 and 1990, following intervention sales of dollars pursuant to a coordinated devaluation of the dollar. See Hearings Before the House Comm. on Banking, Aug. 14, 1990, supra note 23, at 67 (prepared statement of David C. Mulford, Undersecretary of the Treasury).
42. As Representative Kaptur argued, "This particular commitment was 20 times as large as any prior use of this fund. Never has it been the will of this Congress to provide the executive branch with unlimited authority of this sort." 141 CONG. REC. 7217 (1995).
43. S. REP. NO. 1295, 94th Cong., 2d Sess. 17 (1976), reprinted in 1976 U.S.C.C.A.N. 5950, 5966. As the report explained, "the Committee has adopted an amendment emphasizing the intended short-term nature of ESF lending. The goal is for the United States to place primary reliance on the IMF and to confine foreign exchange lending operations outside the IMF to short-term operations." Id. at 11, reprinted in 1976 U.S.C.C.A.N. at 5960. As the CBO explained in 1984, "The ESF enables the Secretary to help equilibrate the exchange market in general and to provide short-term assistance to particular countries experiencing balance of payments problems." CBO Letter, supra note 4, at 16 (emphasis added).
44. S. REP. NO. 1295, 94th Cong., 2d Sess. 11 (1976), reprinted in 1976 U.S.C.C.A.N. 5950, 5960.
45. See Memorandum from Walter Dellinger, Assistant Attorney General, to Edward S. Knight, General Counsel, Treasury Department (Mar. 2, 1995), in Mexican Peso Crisis, supra note 1, at 454-57.
46. CBO Letter, supra note 4, at 16. As one congressional witness testified, in contrast to the Federal Reserve Foreign Exchange Operations stated policy of investing foreign currency balances in a variety of instruments that yield market-related rates of return and have a high degree of liquidity and credit quality . . . . [i]t certainly cannot be said that the loans to Mexico have a high degree of liquidity; moreover, the current crisis was triggered largely by the fact that the Mexican government was about to default on its debts. Mexican Peso Crisis, supra note 1, at 293 (prepared statement of John Mueller, Vice President and Chief Economist, Lehrman Bell Mueller Cannon, Inc.).
47. "For most programs, direct loan obligations and loan guarantee commitments cannot be made unless Congress has appropriated funds for the costs in advance in annual appropriation acts." OFFICE OF MANAGEMENT AND BUDGET, BUDGET SYSTEM AND CONCEPTS OF THE UNITED STATES GOVERNMENT 22 (Feb. 1995).
48. For instance, after much bitter debate in 1991, Congress approved $10 billion in loan guarantees to Israel to assist in housing a large influx of Russian immigrants. See Thomas L. Friedman, Bush Makes Aid to Israel Subject to Conditions, N.Y. TIMES, Oct. 6, 1991, at D3. As Representative Christopher Cox noted in the Mexican bailout debate, "We had a nationwide debate on whether to give $10 billion, half the amount (provided to Mexico], in loan guarantees to Israel. . . . [T]hat is the way these decisions should be made." 141 CONG. REC. H7219 (daily ed. July 19, 1995) (statement of Rep. Cox).
49. The proposed foreign aid budget for 1996 is $12.1 billion. See Moffett, supra note 6. As of March, 1995, the assets of the ESF had grown to $37.5 billion. See Mexican Peso Crisis, supra note 1, at 371 (testimony of Robert Rubin, Secretary of the Treasury).
50. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 610-11 (1952) (Frankfurter, J., concurring).
51. For instance, in 1941, the United States signed an agreement with China "making available $50,000,000 . . . for the purpose of stabilizing the dollar-yuan rate of exchange." S. REP. NO. 475, 77th Cong., 1st Sess. 2 (1941). According to the Senate Committee on Banking and Currency report, "These stabilization arrangements with China should be of great aid to China in her monetary problems and also in the struggle with the [Japanese] puppet currencies." Id. A similar arrangement for $50 million was negotiated with Argentina in 1940. The Senate reported that "[t]he machinery of the stabilization fund was most opportunely at hand to enable our Government to help prevent a prospective drain of foreign exchange resources from Argentina, as well as from other Latin-American countries." Id. The Committee report also noted that "[t]he existence of the stabilization fund . . . made it possible to carry out with essential speed and secrecy three large acquisitions of gold from hard-pressed friendly countries." Id.
52. See H.R. REP. NO. 1126, 95th Cong., 2d Sess. 1 (1978), reprinted in 1978 U.S.C.C.A.N. 7606, 7607.
53. S. REP. NO. 1295, 94th Cong., 2d Sess. 11 (1976), reprinted in 1976 U.S.C.C.A.N. 5950, 5960.
54. United States Economic Programs for Poland and Hungary, 1989: Hearings and Markup Before the House Foreign Affairs Comm., 101st Cong., 1st Sess. 1 (1989) [hereinafter Hearings Before the House For. Aff's Comm., Oct. 4, 1989] (comments of Rep. Hamilton).
55. Between 1982 and 1994, the ESF was used 40 times to provide financing agreements to 18 countries. The biggest recipients were Mexico, Brazil, Argentina, Venezuela, Bolivia, and Peru. See The Mexican Peso Bailout: Joint Hearing Before the Subcomms. on International Economic Policy and Trade and The Western Hemisphere of the House Comm. on International Relations, 104th Cong., 1st Sess. 61 tbl. 1 (1995) [hereinafter Joint Hearing].
56. See supra note 32.
57. See Letter from the President to the Speaker of the House and the President of the Senate, 18 WEEKLY COMP. PRES. DOC. 1102 (Sept. 8, 1982).
58. See Hearings Before the Senate Comm. on Banking, Feb. 22, 1995, supra note 10, at 1 (statement of Sen. D'Amato).
59. Although, in the mid-1960s, the ESF was allegedly used "to prop up [the British] sterling in exchange for a commitment from the Wilson government to delay the withdrawal of British forces from Singapore." Ambrose Evans-Pritchard, Bill Clinton Goes For Broke, SUNDAY TELEGRAPH (London), Feb. 5, 1995, at 23.
60. See Joint Hearing, supra note 46, tbl. 1 (indicating that largest previous loans from ESF were a $1 billion loan in August 1982 and two $600 million loans, in September of 1982 and March of 1990, all to Mexico).
61. See id.; David E. Sanger, D'Amato Seeks to Limit Foreign Bailouts, N.Y. TIMES, July 22, 1995, at 34;
62. see also Mexican Peso Crisis, supra note 1, at 404 (statement of Paul A. Volcker) ("To be sure, present arrangements with respect to Mexico are without precedent in size and nature.").
63. According to a House report, the ESF can be used "to extend short-term credits to foreign governments when such credits are backed by assured sources of repayment." H.R. REP. NO. 1126, 95th Cong., 2d Sess. 2 (1978), reprinted in 1978 U.S.C.C.A.N. 7606, 7607.
64. See Hearings Before the House For. Aff's Comm., Oct. 4, 1989, supra note 46, at 162 (comments of Rep. Hamilton). "I think Poland needs a large infusion of money right away, very quickly, and cannot wait, frankly, for a negotiation of an IMF agreement and cannot wait, really, for the legislative process even to move forward . . . ." Id. at 164.
65. See id. at 148 (testimony of William E. Barreda, Deputy Assistant Secretary for Trade and Investment Policy, Department of the Treasury). "Treasury requires an assured source of repayment in order to minimize exposing the ESF to a loss which would impact U.S. taxpayers. . . . A prospective disbursement under an economic adjustment program supported by the International Monetary Fund and prospective disbursements from the World Bank are preferred sources." Id. at 163. Treasury officials also indicated that ESF funds were loaned only when there was assurance of repayment in hard currency. See id. at 162. Instead, the Bush administration supported the creation of a separate fund for Poland and insisted that "the appropriate way" to create such a fund "is through an appropriation by Congress." Id. at 148.
66. Id. at 148-49.
67. U.S. Economic Outlook: Hearings Before the Senate Budget Comm., 104th Cong., 1st Sess. (1995), available in LEXIS, News Library, Curnws File.
68. U.S. Economic Outlook: Hearings Before the Senate Budget Comm., 104th Cong. (1995) Id.
69. 343 U.S. 579 (1952).
70. Id. at 582.
71. Exec. Order No. 10,340, 17 Fed. Reg. 3139 (1952), reprinted in 1952 U.S.C.C.A.N. 1043.
72. See Labor Management Relations Act, 61 Stat. 136, 152-56 (1947) (codified as amended at 29 U.S.C. § 141 (1994)).
73. Youngstown, 343 U.S. at 589.
74. Id. at 634-38 (Jackson, J., concurring).
75. See id. at 635-38 (Jackson, J., concurring). See also Justice Black's majority opinion: "The President's power, if any, to issue the order must stem either from an act of Congress or from the Constitution itself." Id. at 585.
76. "When the President acts pursuant to an express or implied authorization of Congress, his authority is at its maximum, for it includes all that he possesses in his own right plus all that Congress can delegate." Id. at 635 (Jackson, J., concurring).
77. When the President acts in absence of either a congressional grant or denial of authority, he can only rely upon his own independent powers, but there is a zone of twilight in which he and Congress may have concurrent authority, or in which its distribution is uncertain. Therefore, congressional inertia, indifference or quiescence may sometimes, at least as a practical matter, enable, if not invite, measures on independent presidential responsibility. Id. at 637 (Jackson, J., concurring).
78. "When the President takes measures incompatible with the expressed or implied will of Congress, his power is at its lowest ebb, for then he can rely only upon his own constitutional powers minus any constitutional powers of Congress over the matter." Id. (Jackson, J., concurring).
79. See United States v. Curtiss-Wright Export Corp., 299 U.S. 304 (1936). There, the Supreme Court upheld Congress's delegation of the power to prohibit the export of arms to certain foreign nations, finding that such delegation of discretionary authority was consistent with the President's presumed authority in foreign affairs. The Court noted "the unwisdom of requiring Congress in this field of governmental power to lay down narrowly defined standards by which the President is to be governed." Id. at 321-22. Other decisions relying on a Curtiss-Wright theory of generalized deference to the President in foreign affairs include Regan v. Wald, 468 U.S. 222 (1984) (upholding President's power to block travel to Cuba); Haig v. Agee, 453 U.S. 280, 291 (1981) (reading vague statute broadly to uphold Secretary of State's revocation of passport); Zemel v. Rusk, 381 U.S. 1, 7 (1965) (granting President rule-making authority over issuing passports).
80. Curtiss-Wright, 299 U.S. at 320 ("[C]ongressional legislation which is to be made effective through negotiation and inquiry within the international field must often accord to the President a degree of discretion and freedom from statutory restriction which would be inadmissable were domestic affairs alone involved.").
81. Curtiss-Wright hardly precludes the possibility that significant portions of Congress's central Article I appropriations power cannot constitutionally be delegated. For instance, as Michael Glennon observes, "That an aspect of the foreign commerce power happens to be delegable says little or nothing about the delegability of central elements of the war power." MICHAEL J. GLENNON, CONSTITUTIONAL DIPLOMACY 201 (1990).
82. For general discussions of the nondelegation doctrine, see Peter H. Aranson et al., A Theory of Legislative Delegation, 68 CORNELL L. REV. 1, 7-17 (1982) (reviewing judicial history of nondelegation doctrine and arguing for its revitalization);
83. David Schoenbrod, The Delegation Doctrine: Could the Court Give it Substance? 83 MICH. L. REV. 1223 (1985);
84. David Schoenbrod, Separation of Powers and the Powers That Be: The Constitutional Purposes of the Delegation Doctrine, 36 AM. U. L. REV. 355 (1987);
85. Richard B. Stewart, Beyond Delegation Doctrine, 36 AM. U. L. REV. 323 (1987) (arguing that courts should not invoke nondelegation doctrine to invalidate congressional statutes).
86. In the last full-fledged application of the nondelegation doctrine, A.L.A. Schlechter Poultry Co. v. United States, 295 U.S. 495 (1935), the Supreme Court struck down a provision of the National Industrial Relations Act allowing the President to approve industrial codes set up by trade and industrial associations. The Court held that "Congress cannot delegate legislative power to the President to exercise an unfettered discretion to make whatever laws he thinks may be needed or advisable for the rehabilitation and expansion of trade or industry." Id. at 537-38.
87. See Lisa A. Cahill & J. Russell Jackson, Note, Nondelegation After Mistretta: Phoenix or Phaethon?, 31 WM. & MARY L. REV. 1047, 1081-95 (1990) (arguing that nondelegation doctrine should be revived).
88. South Dakota v. United States Dep't of the Interior, 69 F.3d 878 (8th Cir. 1995). The majority found "no perceptible 'boundaries,' no 'intelligible principles,' within the four corners of the statutory language that constrain this delegated authority - except that the acquisition must be 'for Indians,'" and held that the bill "delegates unrestricted power to acquire land from private citizens for the private use and benefit of Indian tribes or individual Indians." Id. at 882.
89. Mistretta, 488 U.S. 361 (1989) (finding that delegation of authority to promulgate sentencing guidelines to independent sentencing commission does not violate nondelegation doctrine).
90. 500 U.S. 160 (1991) (finding that delegation of power to designate new drugs as schedule I controlled substances does not violate nondelegation doctrine since Congress had supplied Attorney General with adequate instructions).
91. 488 U.S. at 371-89 (applying intelligible-principles test to sentencing guidelines and holding that guidelines meet such standard). The principle that congressional delegations of legislative power must be governed by "intelligible standards" was set forth in Hampton & Co. v. United States, 276 U.S. 394 (1928). Holding that a provision of the Tariff Act of 1922, which created a rate-making commission to set tariff schedules, did not unconstitutionally delegate the legislative rate-making power, the Court noted that "[i]f Congress shall lay down by legislative act an intelligible principle to which the person or body authorized to fix such rates is directed to conform, such legislative action is not a forbidden delegation of legislative power." Id. at 409. The necessary analogue to this position, of course, is that if Congress fails to lay down an intelligible principle for executive implementation, an unconstitutional delegation of legislative power has occurred. In NBC v. United States, 319 U.S. 190, 225-26 (1943), the Court applied such a test to uphold the power of the FCC to promulgate regulations in accordance with the "public interest." One year later, the court applied an even more comprehensive "absence of standards" test in order to weigh the constitutionality of the delegation to a price administrator of the power to fix commodity prices. "Only if we could say that there is an absence of standards for the guidance of the Administrator's action, so that it would be impossible in a proper proceeding to ascertain whether the will of Congress has been obeyed, would we be justified in overriding its choice of means for effecting its declared purpose . . . ." Mistretta, 488 U.S. at 379 (quoting Yakus v. United States, 321 U.S. 414, 426 (1944)).
92. 293 U.S. 388 (1935).
93. Id. at 421. Accordingly, the Panama Refining Court struck down a provision of the National Industrial Recovery Act that allowed the President to prohibit the interstate transportation of oil produced in surplus of amounts fixed by state law. The Court reasoned that in passing the Act, "the Congress ha[d] declared no policy, ha[d] established no standard, ha[d] laid down no rule." Id. at 430. The effect, the Court concluded, was "to invest [the President] with an uncontrolled legislative power." Id. at 432.
94. The Court noted that Congress had provided three broad goals and four "purposes" of sentencing that the commission must pursue in exercising its discretion. Congress further provided substantial detail regarding the constraints available, the forms such guidelines must take, and the methods the commission should employ. See Mistretta, 488 U.S. at 374-75.
95. 500 U.S. at 164.
96. These instructions included the requirement that the Attorney General find that a drug "'has a high potential for abuse,' that it 'has no currently accepted medical use in treatment in the United States,' and that '[t]here is a lack of accepted safety for use of the drug . . . under medical supervision.'" Id. at 167 (quoting 21 U.S.C. § 812(b)(1)).
97. See. e.g., Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 574 (1988).
98. The Court has at times interpreted legislative acquiescence as constituting consent. See, e.g., Haig v. Agee, 453 U.S. 280, 290-92 (1981) (upholding Secretary of State's broad authority to revoke passport despite lack of explicit congressional authorization, since "in the areas of foreign policy and national security . . . congressional silence is not to be equated with congressional disapproval"). But see Lee R. Marks & John C. Grabow, The President's Foreign Economic Powers After Dames & Moore v. Regan; Legislation by Acquiescence, 68 CORNELL L. REV. 68, 85-87 (1982) (refuting Court's reading of Haig v. Agee to support conclusion that legislative acquiescence constituted consent).
99. 453 U.S. 654 (1981).
100. Id. at 662-63.
101. Id. at 665-66.
102. Id. at 678.
103. Id. at 686.
104. Id. at 687.
105. The Court itself strenuously tried to limit Dames & Moore's holding to its facts. See id. at 688.
106. See Erwin Chemerinsky, Controlling Inherent Presidential Power: Providing a Framework for Judicial Review, 56 S. CAL. L. REV. 863, 889 (1983).
107. One solution to this problem would be to modify the strict ban on legislative vetoes established in INS v. Chadha, 462 U.S. 919 (1983), to the extent that the ban prevents Congress from overriding disfavored presidential acts of lawmaking. See Abner S. Greene, Checks and Balances in an Era of Presidential Lawmaking, 61 U. CHI. L. REV. 123, 126 (1994) (arguing for constitutionality of concurrent resolutions adopted to block executive acts of lawmaking). At minimum, Congress has a strong incentive to articulate its preferences clearly by framing legislation so that "zone of twilight" conflicts arise infrequently. Certainly, the authorizing language of the ESF does not provide such articulation.
108. See Youngstown Sheet and Tube Co. v. Sawyer, 343 U.S. 579, 610-11 (1952).
109. See supra Section I.C.
110. 299 U.S. 304 (1936) (finding that President's foreign relations power derives not from Constitution, but directly from nature of sovereignty).
111. Id. at 320.
112. Id. That those requirements strongly limit the President's power to make laws was emphasized in Youngstown. "[T]he President's power to see that the laws are faithfully executed refutes the idea that he is to be a lawmaker. The Constitution limits his functions in the lawmaking process to the recommending of laws he thinks wise and the vetoing of laws he thinks bad." Youngstown, 343 U.S. at 587. For a discussion of the ways the Court has interpreted Curtiss-Wright and Youngstown, see HAROLD HONGJU KOH, THE NATIONAL SECURITY CONSTITUTION 134-46 (1990).
113. U.S. CONST. art. I, § 9. cl. 7.
114. See Peter Raven-Hansen & William C. Banks, Pulling the Purse Strings of the Commander in Chief, 80 VA. L. REV. 833, 891 (1994).
115. Id. at 890.
116. EDWARD S. CORWIN, THE CONSTITUTION AND WHAT IT MEANS TODAY 101 (13th ed. 1975).
117. See, e.g., Cincinnati Soap Co. v. United States, 301 U.S. 308, 321 (1937) (holding that Appropriations Clause was "intended as a restriction on the disbursement authority of the Executive department, and . . . means simply that no money can be paid out of the Treasury unless it has been appropriated by an act of Congress"); Knote v. United States, 95 U.S. 149, 154 (1877) (noting that President "cannot touch moneys in the treasury of the United States, except expressly authorized by act of Congress"); Reeside v. Walker, 52 U.S. (11 How.) 272, 291 (1850) (same).
118. 580 F.2d 1055, 1058 (D.C. Cir. 1978) (rejecting challenge of coalition of Congresspersons to treaty negotiated by President Carter and ratified by Senate transferring ownership of Panama Canal to Panama, because President retains power to dispose of U.S. property through treaty-making power, but noting in dicta that appropriations power can never be exercised without full participation of Congress).
119. For an overview of congressional restrictions on foreign assistance, see Jeffrey A. Meyer, Congressional Control of Foreign Assistance, 13 YALE J. INT'L L. 69 (1988). Such restrictions include congressional oversight of arms sales, and restrictions on assistance to regimes violating basic norms of human rights and regimes disproportionately responsible for illegal drug production. Id. at 73-96.
120. Thomas M. Franck & Clifford A. Bob, The Return of Humpty-Dumpty: Foreign Relations Law After the Chadha Case, 79 AM. J. INT'L L. 912, 944 (1985).
121. According to Michael Glennon, "The Supreme Court has never held unconstitutional any use of the appropriations power to limit the exercise of power by the executive branch." Michael J. Glennon, Strengthening the War Powers Resolution: The Case for Purse-Strings Restrictions, 60 MINN. L. REV. 1, 29 (1975).
122. Kate Stith, Congress' Power of the Purse, 97 YALE L.J. 1343, 1345 (1988). Executive branch discretion over the spending power is already sharply limited by statute. Executive branch officials are statutorily prohibited by the Anti-Deficiency Act from spending funds that have not been specifically appropriated by Congress for such purpose. See 31 U.S.C. § 1341 (1994). Violators of the law are subject to criminal penalties. Id. § 1350. Likewise, following a constitutional struggle with President Nixon over the President's refusal to spend monies that had been appropriated by Congress, Congress passed the Congressional Budget and Impoundment Control Act of 1974, making such executive branch behavior illegal. Ch. 17A, 88 Stat. 298 (1974) (codified as amended at 2 U.S.C. §§ 621-688 (1994)).
123. Edwards, 580 F.2d at 1069 (MacKinnon, J., dissenting) (quoting LOUIS HENKIN, FOREIGN AFFAIRS AND THE CONSTITUTION 94-96 (1972)).
124. Notes Gregory Sidak: "This theory encompasses far more than fiscal responsibility; it envisions the appropriations power as an omnipresent legislative veto on presidential action." J. Gregory Sidak, The President's Power of the Purse, 1989 DUKE L.J. 1162, 1162. As Sidak points out, by withholding appropriations, Congress should not be able to prevent the President from carrying out constitutional duties. For instance, because the Presentment Clause, U.S. CONST. art. I, § 7, cl. 2, ensures that no bill can become law without presentment for a presidential signature, Congress could not refuse to appropriate money for pens in order to prevent the President from exercising his constitutional duty to sign legislation.
125. Scholars have heatedly debated the definition of "authentic" Article II powers. While Professor Stith views the category of authentic Article II duties as relatively narrow, Sidak considers it to be much more expansive: The performance of the President's duties and prerogatives under article II can be viewed as different kinds of public goods - enforcing the law, negotiating treaties, sending and receiving ambassadors, commanding the armed forces, making recommendations to Congress, issuing pardons, and so forth. . . . If Ronald Reagan honestly believed that deployment of the Strategic Defense Initiative were 'minimally necessary' to defend the United States from nuclear attack by the Soviet Union, could he have encumbered the Treasury for billions of dollars? Sidak, supra note 109, at 1197. Sidak indicates that he finds this proposition at least less than "preposterous." Id.
126. It may, however, be a form of "coercive deficiency." See 59 Comptroller General 369 (1980) (defining "coercive deficiencies" as those commitments for which "Congress has little choice but to appropriate the necessary funds"); 6 Op. Att'y Gen. 27 (1853) (concluding that where President had made contract entailing expenditures for which Congress had not appropriated monies, a limitation arose, but such limitation did not constrain the President's authority to contract, only "his power to bind the United States, beyond the amount appropriated by Congress").
127. Critics of this argument may respond that any congressional failure to appropriate necessary funds creates a problem of enforcement. Who will ensure that Congress's breach is remedied? The courts? Does this then provide the courts with implied appropriations powers? The answer is no. There is no guarantee that all unconstitutional acts can be remedied. Also, ordering performance based on judicial interpretation of the Constitution does not endow the courts with those powers any more than a judge's order to a delinquent husband to pay alimony endows that judge with the power to levy a tax.
128. In war powers, for instance, though the Commander in Chief Clause gives the President constitutional power to command military forces, Congress must first raise and support military forces before the President can exercise that command. See U.S. CONST. art. I, § 8, cl. 12.
129. According to Glennon, the appropriations power is "an unquestionably exclusive congressional power." Glennon, supra note 106, at 32.
130. See Susan Cornwell, Gingrich Wary as Clinton Pushes Plan to Buoy Peso, CHI. SUN-TIMES, Jan. 31, 1995, at 8 (reporting that Mexico's main stock market index plunged "as pessimistic investors seemed to bet on defeat for the loan guarantees");
131. Major Garrett & Joyce Price, GOP Bill Would Outlaw Clinton's Mexico Plan, WASH. TIMES, Feb. 3, 1995, at A8 (noting that the $40 billion package of loan guarantees had been "[f]acing certain defeat").
132. Youngstown Sheet and Tube Co. v. Sawyer, 343 U.S. 579, 586 (1952). The Court was referring to congressional debate over labor disputes affecting national security during consideration of the Taft-Hartley Act, 61 Stat. 136, 152-56 (1947) (codified as amended at 29 U.S.C. § 141 (1994)).
133. Youngstown, 343 U.S. at 609 (Frankfurter, J., concurring).
134. For a general discussion of the history of U.S. national security policy, see AMOS A. JORDAN ET AL., AMERICAN NATIONAL SECURITY (4th ed. 1993).
135. In testimony before the Senate Banking Committee, Secretary Rubin asserted that "President Clinton acted to avert a crisis" threatening "national interests," and that "[t]hese dangers to our interests reached beyond Mexico with the potential for spill-over effects in other developing countries around the world where we have strong economic interests and strong national security interests." Mexican Peso Crisis, supra note 1, at 355 (statement of Robert Rubin, Secretary of the Treasury).
136. The introduction of new technologies has led to increased interdependence in global markets. As one commentator notes, "The recent introduction of automated screen-driven technology is beginning to threaten the market's local exchange infrastructure and to transform the way this evolving marketplace will function in the future." Peter E. Millspaugh, Global Securities Trading: The Question of a Watchdog, 26 GEO. WASH. J. INT'L L. & ECON. 355, 361-62 (1992).
137. This interdependence can lead to significant threats on a larger scale. One nation's default may trigger a worldwide chain reaction. If as a result of country debt defaults one or more of the larger banks active in the Eurocurrency market cannot meet its repayment obligations on interbank loans, the banks of other countries will in turn have to default on their loans. . . . Will the central banks acting together and with the help of the international financial institutions be able to act fast enough to avert a calamity? THIBAUT DE SAINT PHALLE, THE FEDERAL RESERVE: AN INTENTIONAL MYSTERY 274 (1985).
138. JOSEPH J. ROMM, DEFINING NATIONAL SECURITY: THE NONMILITARY ASPECTS 54 (1993) (quoting Helmut Schmidt, The 1977 Alastair Buchan Memorial Lecture (Oct. 28, 1977)). To Schmidt, this meant "'the necessity to safeguard free trade access to energy supplies and to raw materials, and the need for a monetary system which will help us to reach those targets.'" Id.
139. For a discussion of these new vulnerabilities, see generally THE CHALLENGE OF INFORMATION TECHNOLOGY FOR THE SECURITIES MARKETS: LIQUIDITY, VOLATILITY, AND GLOBAL TRADING (Henry C. Lucas & Robert A Schwartz eds., 1989);
140. Timothy A. Canova, The Transformation of U.S. Banking and Finance: From Regulated Competition to Free-Market Receivership, 60 BROOK. L. REV. 1295, 1351-52 (1995) ("[T]he liberalization of international capital flows has created a world in which the sovereignty of any one nation is surrendered to the forces of private financial speculation.");
141. Roy C. Smith, Risk and Volatility, WASH. Q., Autumn 1995, at 117 (evaluating costs and benefits of regulation of market volatility).
142. The creation of the National Economic Council (NEC), an economic counterpart to the National Security Council, is only the most prominent symbol of this new recognition. See William Safire, Who's Got Clout, N.Y. TIMES, June 20, 1993, § 6 (Magazine), at 25 (describing NEC as a "new power center . . . created to show the public that in the new era, economic policy would be at least as high a priority as national security"). Frequently, discussions of "economic security" focus on ways that economic tools can be used to coerce enemies or rivals, or conversely, ways that military conflict can be transferred to economic arenas. But there are clear dangers to equating international economic competition with military combat, as do many commentators concerned with the rise of the Japanese economy. As one scholar points out, "by stressing threats to national interests in the international arena, an emphasis on economic security could incorrectly stress coercion against economic competitors rather than domestic policies to enhance competitiveness."
143. JAMES R. GOLDEN, ECONOMICS AND NATIONAL STRATEGY IN THE INFORMATION AGE 7 (1994).
144. Conceptualizing the protection of the world monetary and financial system as an issue of national security must avoid this pitfall. In this regard, "economic security" should resemble the attempts by persons concerned with environmental issues to reformulate them in terms of national security. Advocates of "environmental security" see nothing contradictory about security measures that are by their very nature cooperative, inclusive, and global in scope. See, e.g., MICHAEL RENNER, NATIONAL SECURITY: THE ECONOMIC AND ENVIRONMENTAL DIMENSIONS 64 (Worldwatch Paper No. 89, May 1989) (arguing that "'national security' as such has become an outmoded concept: security is increasingly attained through the difficult process of global cooperation to create mechanisms for nonviolent dispute settlement and establish environmental alliances").
145. See, e.g., Barry E. Carter, International Economic Sanctions: Improving the Haphazard United States Legal Regime, 75 CAL. L. REV. 1162 (1987) (discussing use of economic sanctions generally); Koh & Yoo, supra note 13, at 715-16 (discussing "laws that manipulate fiscal, monetary, and domestic economic policies to achieve national security goals" and "laws that control or respond to external relations through economic measures").
146. 40 Stat. 411 (1917) (codified as amended at 50 U.S.C. app. §§ 1-44 (1988)); H.R. REP. NO. 85, 65th Cong., 1st Sess. 1 (1917).
147. 91 Stat. 1626 (1977) (codified as amended at 50 U.S.C. §§ 1701-1706 (1988)).
148. The IEEPA does not provide any mechanism for funding presidential initiatives taken under the IEEPA's authority. However, the National Emergencies Act includes a provision requiring that, after the President declares a state of emergency, he is obligated periodically to transmit to Congress "a report on the total expenditures incurred by the United States Government . . . which are directly attributable to the exercise of powers and authorities conferred by such declaration." 50 U.S.C. § 1641(c) (1988).
149. See Canova, supra note 122, at 1353 (discussing history of banking and finance policy and new regulatory paradigm of private speculation); James F. Groth, Comment, Can Regulators Force Bank Holding Companies to Bail Out Their Failing Subsidiaries? - An Analysis of the Federal Reserve Board's Source-of-Strength Doctrine, 86 NW. U. L. REV. 112, 135 (1991) (noting recognition among lawmakers and regulators that "banking industry requires special regulatory attention").
150. President Roosevelt's declaration of a bank holiday as a response to the growing bank panic at the height of the great depression provides one such example. See Proclamation No. 2039, 48 Stat. 1689 (1933) (temporarily suspending all banking transactions); Proclamation No. 2040, 48 Stat. 1691 (1933) (extending suspension). Statutory authority for the declaration was provided by the Trading With the Enemy Act, ch. 106, § 5(b), 40 Stat. 411, 415 (1917).
151. See, e.g., David E. Pitt, The Market Turmoil: A Far-Reaching Impact; Just a Paper Loss, the Richest Say, N.Y. TIMES, Oct. 21, 1987, at D14.
152. In the first four years following the 1929 stock market crash, "real income dropped by a whopping thirty-six percent," which in turn "dramatically impacted on banks." J. Michael Echevarria, A Precedent Embalms a Principle: The Expansion of the D'Oench, Duhme Doctrine, 43 CATH. U. L. REV. 745, 753 (1994).
153. For an analysis postulating that the overthrow of the Arbenz government in Guatemala was triggered in large part by the expropriation of land owned by the United Fruit Company, see WALTER LAFEBER, INEVITABLE REVOLUTIONS: THE UNITED STATES IN CENTRAL AMERICA 111-25 (1984).
154. President Clinton vigorously denied that the bailout was effected for such reasons, arguing that it "'is in the interest of America, contrary to what some have said, not because there are some large financial interests at stake, but because there are thousands of jobs and billions of dollars of American exports at stake.'" William Schneider, The Populist Takeover of Congress, 27 NAT'L J. 394, 394 (1995).
155. Opponents of the plan described the bailout package as "corporate socialism," Mexican Peso Crisis, supra note 1, at 290 (testimony of Ralph Nader), and "a hidden subsidy for Wall Street and Mexico's elite," id. at 269 (testimony of Christopher Whalen, Chief Financial Officer, Legal Research International). As Senator D'Amato asked in evaluating the bailout, "Haven't we simply taken the United States taxpayer and inserted him in place of the Tesobono holder . . . ?" Id. at 619.
156. According to the American Spectator, "[b]etween 1992 and 1994, Goldman Sachs was the largest underwriter of Mexican financial issues, with a total exposure of $5.17 billion." Christopher Caldwell, The Economics of Bailing Out, AM. SPECTATOR, May 1995, at 40, 40. Rubin himself handled the Mexico account while with the bank. Though Rubin recused himself on matters relating to NAFTA, he refused to do so in the Mexican bailout. Id.
157. If nothing else, the dispensation of large amounts of money by the executive branch creates the impression that a small cadre of special interests are receiving favorable treatment and raises disturbing issues of class interest or preference.
158. As one member of Congress justified the bailout: [A]s envisioned by our founding fathers, the Executive has a greater capacity to act with dispatch than the legislative branch in foreign policy matters. Not envisioned by our founding fathers, Congress has developed a reluctance to share accountability for controversial approaches. Hence the Executive was forced to step to the plate while Congress took to the bleachers. Hearings Before the House Comm. on Banking, Feb. 9, 1995, supra note 2, at 285 (statement of Rep. James Leach).
159. The administration listed a wide range of goals to justify attaching the national security label to the Mexican bailout. These included protecting American jobs, stemming an increased flow of illegal immigrants across the U.S. border, maintaining political stability in a neighboring country, and encouraging "reform in emerging markets around the world." Joint Statement, supra note 9, at 155. In a speech to the nation's governors, President Clinton added to this list the "'spread of financial instability
160. See U.S. CONST. art. I, § 8, cl. 3, 4, 10.
161. As Treasury Secretary Rubin testified, at the time the bailout package was announced "in our view, Mexico [was] a day or two or three away from default, which in turn would have had all sorts of ramifications." Mexican Peso Crisis, supra note 1, at 620 (testimony of Robert Rubin, Secretary of the Treasury).
162. War Powers Resolution, 50 U.S.C. § 1541(c) (1988) (providing that "[t]he constitutional powers of the President as Commander-in-Chief to introduce United States Armed Forces into hostilities . . . are exercised . . . pursuant to . . . (c) a national emergency created by attack upon the United States, its territories or possessions, or its armed forces").
163. See, e.g., J. Gregory Sidak, To Declare War, 41 DUKE L.J. 27, 33 (1991) ("A declaration of war fulfills Congress's representative function because it is more immediately visible to the electorate, less susceptible to ambiguity and disagreement once it is made, and thus more conducive to effective monitoring of the performance of political actors.").
164. As Justice Frankfurter noted, "the fact that power exists in the Government does not vest it in the President." Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 604 (1952) (Frankfurter, J., concurring). Frankfurter further noted that the "[a]bsence of authority in the President to deal with a crisis does not imply want of power in the Government." Id. at 603-04 (Frankfurter, J., concurring).
165. Id. at 675 (Jackson, J., concurring).
166. Some first steps toward creating an international facility to respond to crises like Mexico's were discussed by members during the 1995 meeting of the G-7 in Halifax, Canada. The conference produced a package of proposals for dealing with future international financial crises, informally known as the "Halifax Initiatives." See Mexican Peso Crisis, supra note 1, at 610 (testimony of Robert Rubin, Secretary of the Treasury); Paul Lewis, Rubin Says World Economy in 'a Pause', N.Y. TIMES, Oct. 4, 1995, at D3 (describing a "proposed $50 billion emergency fund that the IMF will use to bail out emerging economies in difficulties").
167. Some of the most important solutions may not require any capital outlay. For instance, one of the key proposals for international reform concerns the establishment of strict national reporting requirements allowing investors to monitor the solvency of foreign investments. The resulting increase in "transparency" will allow private actors to steer capital away from troubled economies, and prevent governments from avoiding necessary reforms. See Lewis, supra note 145, at D3.
168. See, e.g., ROBERT GILPIN, THE POLITICAL ECONOMY OF INTERNATIONAL RELATIONS 65-92 (1987) (discussing systemic need for lender of last resort). This role is normally assumed by the system's "hegemon," a role the United States has played since World War II. However, with the relative decline of the U.S. economy, many scholars, including Gilpin, argue that international regimes must replace hegemonic leadership for the international financial system to remain stable.
169. See generally ROBERT O. KEOHANE, AFTER HEGEMONY (1984) (arguing that new institutional regimes must be created to replace hegemonic leadership in order to maintain international cooperation).
170. Scholars and policymakers alike have devoted substantial energy to the problem of collective international action in monetary and trade policy and have recognized that "collective economic security" should accompany the commitments embodied in NATO and other collective security arrangements. As two scholars explain, "Broadly defined, collective economic security means governments' acceptance of international surveillance of their domestic and foreign economic policies, of criticism of the effects of their policies on the economic security of other countries, and of various forms of international presence in the operations of markets." Lawrence B. Krause & Joseph S. Nye, Jr., Reflections on the Economics and Politics of International Economic Organizations, in WORLD POLITICS AND INTERNATIONAL ECONOMICS 323, 331 (C. Fred Bergsten & Lawrence B. Krause eds., 1975).
171. See ARTHUR M. SCHLESINGER, JR., THE IMPERIAL PRESIDENCY (1973).
172. See, e.g., ROBERT F. TURNER, REPEALING THE WAR POWERS RESOLUTION: RESTORING THE RULE OF LAW IN U.S. FOREIGN POLICY (1991) (arguing that repeal would improve congressional-executive relationship and foster greater mutual respect and comity);
173. Edward Keynes, The War Powers Resolution: A Bad Idea Whose Time Has Come and Gone, 23 U. TOL. L. REV. 343, 344 (1992) (suggesting that War Powers Resolution is an unconstitutional delegation of legislative power to President to declare war and should be repealed). Critics of the War Powers Resolution complain that it unduly infringes on the President's ability to exercise his Commander in Chief powers in the protection of national security.
174. See. e.g., Remarks of Abraham D. Sofaer, The War Powers Resolution: Fifteen Years Later, 62 TEMP. L. REV. 317, 326 (1989) (arguing that § 5 timing requirements of War Powers Resolution unconstitutionally restrain President from exercising executive duties). Even supporters of constraints on the President's warmaking powers have criticized the Resolution because they believe that it still leaves the President with too much discretion to introduce troops into hostilities and thus does not adequately protect Congress's exclusive power to declare war.
175. See John Hart Ely, Suppose Congress Wanted a War Powers Act that Worked, 88 COLUM. L. REV. 1379, 1399 (1988) (arguing that the 60- to 90-day period is so long that it "ceases to be an estimate of how long it will take Congress to consider the matter and becomes, instead, a delegation of legislative power to the President . . . so open-ended in fact as to raise serious constitutional problems");
176. David S. Friedman, Waging War Against Checks and Balances - The Claim of an Unlimited Presidential War Power, 57 ST. JOHN'S L. REV. 213, 264-65 (1983) (arguing that because only limit placed on presidential power is durational, War Powers Resolution places "no restraint on the initial exercise of war power" and "does nothing to reverse the usurpation" of congressional authority). Though as currently written the legislation has not been successful, many nonetheless believe that a viable War Powers Act is possible. "'If we choose to make it work, it will work.'" Ely, supra, at 1379 (quoting 134 CONG. REC. S7173 (daily ed. June 6, 1988) (comments of Senate Foreign Relations Committee Chair Claiborne Pell)).
177. The executive branch has never denied that Congress has the sole power to declare war. It has, however, fought vigorously to contract the definition of war to a point bordering on meaninglessness. See Sidak, supra note 142, at 39-40 (describing efforts of Bush administration to characterize Korean and Vietnam Wars, and thus Persian Gulf War, as "conflicts" not requiring congressional declaration of war).
178. See Ely, supra note 150, at 1386.
179. See, e.g., 50 U.S.C. § 1542 (1988) (President in every possible instance shall consult with Congress before introducing U.S. armed forces into hostilities).
180. The President's inherent war powers start, and may stop, with "the powers to repel actual or imminent attacks upon the country or its armed forces and possibly to rescue U.S. citizens abroad." Cyrus R. Vance, Striking the Balance: Congress and the President Under the War Powers Resolution, 133 U. PA. L. REV. 79, 85 (1984).
181. See Stephen L. Carter, The Constitutionality of the War Powers Resolution, 70 VA. L. REV. 101, 101-02 (1984) ("The War Powers Resolution is nothing more or less than a congressional definition of the word 'war' in article I."); Ely, supra note 150, at 1399 n.58 ("A central contribution of the War Powers Resolution was to translate the Constitution's generalities into numbers.").
182. Jules Lobel, Emergency Power and the Decline of Liberalism, 98 YALE L.J. 1385, 1392 (1989).
183. Id. at 1391 n.27. As Lobel points out, this was the theory in both Ex parte Milligan, 71 U.S. (4 Wall.) 2, 126-27 (1866) (finding that Executive had constitutional emergency power to try civilians in military courts when civil courts were not functioning), and Mitchell v. Harmony, 54 U.S. (13 How.) 128, 134 (1851) (holding that Executive had constitutional authorization to seize American property when such property was about to be seized by enemy during war).
184. Lobel, supra note 156, at 1391 n.27.
185. Henry P. Monaghan, The Protective Power of the Presidency, 93 COLUM. L. REV. 1, 11 (1993).
186. THE FEDERALIST No. 45, at 292 (James Madison) (Clinton Rossiter ed., 1961).
187. Bruce Ackerman & David Golove, Is NAFTA Constitutional?, 108 HARV. L. REV. 801, 929 (1995).
188. The largest danger accompanying the establishment of an Economic Security Fund is the threat of its abuse, a problem known to bankers and insurers as "moral hazard." Unlike natural disasters, economic crises like that which precipitated the Mexican collapse are strongly influenced by factors subject to human control. Any government policy that mitigates the consequences of risk-taking behavior raises problems of moral hazard, because it may create perverse incentives for investors to assume uneconomical risk. If the United States (or the international community) institutionalizes bailouts of foreign nations suffering economic crises, it could encourage irresponsible fiscal behavior on the part of individual investors, banks, and governments. Some Senators have questioned the wisdom of creating such a fund on these grounds. "[T]he worst thing we could think about doing is participating in or creating some sort of fund to bail out countries around the world that get into trouble. I think that simply encourages getting in trouble." Mexican Peso Crisis, supra note 1, at 633 (comments of Sen. Faircloth). In the bailout package extended to Mexico, Secretary Rubin argued that the conditions attached to the bailout by the United States and the IMF were stringent enough that no government would freely choose a policy that would land its country in a similar position. Id. at 630 (testimony of Robert Rubin, Secretary of the Treasury).
189. See Ely, supra note 150, at 1398. While Ely notes in regard to the War Powers Resolution that "[t]he only legitimate theory that supports giving the President 60 free days is that it approximates the time it will take Congress to gather its thoughts," he argues that Congress does not need that much time in order to deliberate and thus supports a shorter, 30-day "free period." Id. at 1398.
190. SCHLESINGER, supra note 149, at 9; see also Korematsu v. United States, 323 U.S. 214, 245-46 (1944) (Jackson, J., dissenting) ("[A] judicial construction of the due process clause that will sustain this order is a far more subtle blow to liberty than the promulgation of the order itself."); BANKS & RAVENHANSEN, supra note 13, at 134 (arguing that rationalizing executive branch actions lacking any statutory authorization but an assertion of necessity "as an exercise of a nebulous inherent constitutional power - is far more damaging to the rule of law in the long run [than making such actions legal only after an ex post ratification by Congress] because it creates a constitutional basis and legal precedent of executive authority for similar executive actions in the future").
191. Glennon, supra note 106, at 35.
192. KOH, supra note 98, at 6-7.