By Andrew Napolitano
FOX News Senior Judicial Analyst

When Treasury Secretary Henry Paulson announced at a press conference last week that he had changed his mind on what he had originally argued was the premise for the $700 billion bank bailout he obtained from the Congress, the markets reacted as they usually do when they sense instability: The Dow registered a remarkable 550 point drop in one day.

Treasury Secretary Henry Paulson/AP photo

In his comments the secretary revealed that he did not purchase damaged mortgage assets, the acquisition of which by the government, he had argued, would remedy the credit crunch.

Bailouts violate the Equal Protection doctrine because the Congress can’t fairly pick and choose who to bail out and who to let expire.

Rather, he spent billions acquiring shares of stock in banks whose ledger sheets were in the black and some of whose officers attempted to decline his largesse. Representative Jane Harman (D-Calif.) and Sen. James M. Inhofe (R-Okla.) have both since argued that the secretary simply cannot be trusted with the peoples’ money. Their anger and sense of betrayal is the tip of a congressional iceberg.

But history will be angry at them and their colleagues for betraying the Constitution. Their attitude underscores the reasons that the Constitution does not repose in the Congress the power to bail out individuals or private industry: Bailouts violate the Equal Protection doctrine because the Congress can’t fairly pick and choose who to bail out and who to let expire; they violate the General Welfare Clause because they benefit only a small group and not the general public; they violate the Due Process Clause because they interfere with contracts already entered into; and they turn the public treasury into a public trough. Worse still, Congress lacks the power to let someone else decide how to spend the peoples’ money.

As objectionable as the secretary’s change of mind has proven to be, as destabilizing as it was to the markets, as frustrating as it has been to the politicians who authorized it, it is not inconsistent with the statute that created the bailout because the Congress gave the Secretary the power to change his mind. It gave him, figuratively and literally, a blank check. In effect, the Congress delegated to the Secretary of the Treasury some of the power the Constitution has delegated to the Congress: The power to decide when, how, for whose benefit, and in what amounts taxpayer dollars should be spent.

This delegation of power to the secretary directly violates a basic principle of constitutional law: Delegated powers cannot be delegated away. The Constitution delegates to the Congress the power to write all federal laws specifically related to spending, to the president the power to enforce those laws (and he must spend as the Congress ordains), and to the courts the power to interpret the laws (and they usually stay away from issues of spending). The Congress can no more delegate to the secretary of the treasury the power to decide how to spend billions than the president could delegate to the Congress his power to appoint the secretary.

Congress can’t cede power to the executive branch because Congress and the president are powerless to change the delicate balance among the three branches of government which the Constitution created. Such an unconstitutional delegation of power — such a role reversal — is tantamount to a constitutional amendment which only two thirds of the Congress and three quarters of the states can enact.

The secretary of the treasury can spend all the peoples’ money he can get his hands on. He can buy all the stock he wants in all the solvent banks that don’t need it and don’t want government investments and the strings that come with them. He can bail out and try to manage all the corporations his advisers recommend whose executives made millions but lost billions. But he is exercising power unconstitutionally given to him by the Congress, procured with only ten hours of debate and hearings, and the very premise of which he unilaterally rejected afterwards.

The bitter fruit of this unconstitutional bailout is the line outside the secretary’s office today. At the head of that line are the CEOs of the Big Three automakers and the president of the United Auto Workers. Further back are agents of old line financial firms that just declared themselves to be banks, so they could stand in this line. Behind them are shameless captains of industry who couldn’t care less about the Constitution, but who want their share of the federal trough.

And on Capitol Hill awaits the Congress; ready, willing, and disdainful enough about the Constitution to write into law any quick fix it thinks it can get away with.

Judge Napolitano, who served on the bench of the Superior Court of New Jersey between 1987 and 1995, is the senior judicial analyst at the FOX News Channel. His latest book is “A Nation of Sheep” (Nelson, 2007).