Federalism and Obamacare
by George Liebmann
Issue 208 – July 25, 2012
The Supreme Court decision allowing ‘Obamacare’ to survive should not have come as a surprise to anyone. Save where confiscatory legislation is involved, the Constitution as it has been construed for at least the last 80 years imposes few barriers to economic legislation, and the effort to describe the ‘mandate’ as an intrusion on a natural right of man not to spend $1000 a year on health insurance seems to stretch things a bit, even though the Court could not see its way to allow it under the Commerce Clause.
The opinion has two welcome side effects.
First, it provides a basis for containing the intrusion of the federal government into criminal law enforcement not involving economic crimes. The limitation of commerce clause powers worked by the Lopez and Morrison cases retains its vitality, and cannot easily be evaded by enactment of taxes directed at similar results, since tax legislation is highly visible and difficult to enact. Even the holding of Gonzales v. Raich is cast in doubt as it relates to federal criminal prosecutions for marijuana use or possession, as distinct from purchase or trafficking. Justice Roberts’ opinion characterized the Raich opinion as involving an attack on a federal regulatory scheme, not an effort to insulate from criminal prosecution Ms. Raich’s behavior. The court in Raich did not discuss at all the criminal aspects of the case or the long-standing abhorrence for undue extensions of federal criminal jurisdiction.
For Justice Jackson, the author of the commerce clause opinion allowing regulation of home-grown wheat in Wickard v. Filburn, the distinction was a vital one; in his statement to the Columbia Oral History Project, he observed:
“I have been highly desirous of preserving the federalist form and keeping vitality in it..,, at Nuremberg, it became apparent that until Hitler had broken down the powers of the separate German states and established a completely centralized police administration, he wasn’t able to bring about the dictatorship. I think that the philosophy of the Tenth Amendment reserving the undelegated powers to the people or the states ought to be regarded as an essential part of our Bill of Rights, I think we should draw a line between the necessity for central regulation of commerce, in the sense of finance and trade, and the necessity for diffused control of such things as affect civil liberties. Because while the federal government occasionally may make a great advance in the direction of civil liberties they can also make a very disastrous reversal and do more harm to civil liberties in one administration than a state government could do in a generation…I think the potentialities of a federal, centralized police system for ultimate subversion of our system of free government is very great”
In his lectures on the Supreme Court published in 1955, he similarly observed:
I cannot say that our country could have no central police without becoming totalitarian, but I can say with great conviction that it cannot become totalitarian without a centralized national police…All that is necessary is to have a centralized national police competent to investigate all manner of offenses and then, in the parlance of the street, it will have enough on enough people, even if it does not elect to prosecute them, so that it will find no opposition to its policies. Even those who are supposed to supervise it are likely to fear it. I believe that the safeguard of our liberty lies in limiting any policing or investigative organization, first of all to a small number of strictly federal offenses and secondly to nonpolitical ones.
Although the Raich holding that Congress can penalize the home-growing or marijuana and its purchase still clearly stands, any future invalidation of penalties on individual use or possession would collapse the drug enforcement regime. The Volstead Act required evidence of sale, not mere possession or use, a limitation which contributed mightily to the downfall of Prohibition.
The second even more welcome effect of the opinion is that for the first time it puts practical limits on the federal conditional spending power, and does so by a 7-2 margin. Conditional spending was the device resorted to by the national government to circumvent the limits on the direct federal commerce power imposed by the Supreme Court in the 1935 Butler case and since receded from: “The spending power, my dear, the spending power is all you need,” Chief Justice Stone is said to have told Secretary of Labor Perkins about federal efforts to impose labor standards. The Court’s new holding on Medicaid makes a litigable issue at least of all new regulatory restrictions on grants to states and private entities. The new regulations on contraceptive services may fall into this category, as will many new matching fund requirements, labor standards and anti-discrimination conditions and the like. Certainly a newly enacted Individuals With Disabilities Education Act could not survive this process. In each instance, the courts will be invited to make judgments as to whether the magnitude of the benefits the federal government is threatening to withhold leave the States no right of autonomous choice. If these judgments are made realistically, a great deal of new legislation may fall; certainly great doubt is cast over new efforts at gleitenschaung: efforts by the federal government to conscript the funds or powers of states and private organizations rather than providing full funding and taking full responsibility itself.
Conditional spending is a regrettable device for several reasons. It relieves the federal government of full fiscal responsibilities for its mandates. It enervates state governments and puts their officials in leading-strings. It even threatens religious freedom, as the Catholic bishops made clear. In the early 1960s, the West German Constitutional court totally barred conditional spending, leading to an amendment of the German Basic Law unconditionally sharing a designated fraction of the national income tax and other revenue sources with the Lander governments. While our Supreme Court is far from barring conditional spending, the logic of new cases will take it further down that path. At some point, it will come to be realized that conditional spending, or :”cooperative (really coercive) federalism” as it is popularly called, is a largely accidental and totally ineffective means of domestic administration. The objections to its approach were once eloquently set forth by Tocqueville in his description of the Court of Versailles:
Centralization imparts without difficulty an admirable regularity to the routine of business; maintains society in a status quo alike secure from improvement and decline, and perpetuates a drowsy regularity in the conduct of affairs. . . Its force deserts it when society is to be profoundly moved, or accelerated in its course; and if once the cooperation of private citizens is necessary to the furtherance of its measures, the secret of its impotence is disclosed. Sometimes the centralized power in its despair, invokes the assistance of the citizens; it says to them : “You shall act just as I please, as much as I please, and in the direction which I please. You are to take charge of the details, without aspiring to guide the system; you are to work in darkness; and afterwards you may judge my work by its results.”These are not the conditions on which the alliance of the human will is to be obtained; it must be free in its style, and responsible for its acts, or (such is the constitution of man) the citizen had rather remain a passive spectator, than a dependent actor, in schemes with which he is unacquainted.
In France, Tocqueville said, “One set of people did the actual administration; another set laid down the abstract principles on which all administration ought to be founded; one set took the particular measures indicated by routine; the other set proclaimed general laws without ever thinking of the means to apply them; one set had the conduct of affairs; the other set, the control of mind.”
The Obamacare controversy thus has provided an opening wedge to bring an end to this condition. With or without a Republican President, I do not think they can succeed in repealing the legislation. But if it is not to be an unmitigated disaster, its defects need to be explained in terms other than its threat to the quality of Medicare. Defense of the in some respect excessive privileges of a dying age cohort is not a viable political position either. Rather it must be explained that coercing the states to put more people in Medicaid was bad policy as well as bad law because Medicaid mills practice mass production, low-quality medicine without continuity of care; that the states through experimentation with single-payer primary care, health savings accounts, fixed cash limits on appropriations, and public utility regulation of hospitals may find approaches that are preferable to those of Washington; and that the legislation needs to be both cut back and honestly paid for, and not by state governments unless or until they get a mandated share of federal taxes.
George Liebmann is an attorney in Baltimore Maryland and author of Neighborhood Futures.