Posted by
Viva La Revolucion! on Thursday, December 16, 2010 8:29:11 PM
Our betters in government have pinned the
constitutionality of Obamacare on the Commerce Clause. No case law
exists that supports the notion that Congress, through the Tax Clause, the Commerce Clause or Necessary and Proper Clause, can regulate
INactivity.
When Obamacare was being debated, its advocates—including the president—sternly
insisted that the mandate was not a tax. In one memorable exchange, President Obama
arrogantly chastised George Stephanopoulous for calling the fine assessed for failing to purchase health insurance pursuant to the individual mandate
a “tax.” FN1 “George, the fact that you
looked up Merriam's Dictionary, the definition of tax increase, indicates to me
that you're stretching a little bit right now,” the president lectured, “Otherwise,
you wouldn't have gone to the dictionary to check on the definition… My critics
say everything is a tax increase. My critics say that I'm taking over
every sector of the economy. You know that. Look, we can have a
legitimate debate about whether or not we're going to have an individual
mandate or not, but... I absolutely reject that notion (that the mandate
penalty is a tax).”
Now, the government wants the I.R.C. Section 5000 - the health care penalty - penalty to be a tax. It argues that the "penalty" is a mere excise tax levied by the Congress of the United States under its broad power of taxation conferred by Article I, Section 8 of the Constitution. According to Bouvier's Law Dictionary, a tax is a pecuniary burden imposed for the support of the government. The enforced proportional contributions of persons and property levied by the authority of the state for the support of the government and for all public needs. FN1
The labeling of an exaction as a tax by Congress is not
determinative of its character for all purposes. In New Jersey v. Anderson, 203
U.S. 483 (1906), the Court held that the name given to an exaction by the state
legislature is not conclusive. The Court, in City of New York v. Feiring, 313
U.S. 283 (1941), established a test to be utilised in making the determination
of whether an assessment is a tax or a penalty has been described as a
four-part test incorporating the following criteria: (1) an involuntary
pecuniary burden, regardless of name, laid upon individuals or property; (2)
imposed by, or under authority of the legislature; (3) for public purposes,
including the purposes of defraying expenses of government or undertakings
authorised by it; (4) under the police or taxing power of the state. As the Court noted in a somewhat different context, "a tax is an enforced contribution to provide for the support of the government; a penalty...is an exaction imposed by statute imposed for an unlawful act." United States v. La Franca, 282 U.S. 568, 571 (1931). FN2
As the Court explained as recently as 1996 in United States v. Reorganized CF&I Fabricators of Utah, Inc., et al., 518 U.S. 213 (1996) distinguishing between taxes and penalties, "a tax is a pecuniary burden laid upon individuals or property for the purpose of supporting the government." In contrast, the Court went on to say that, "if the concept of penalty means anything, it means punishment for an unlawful act or omission, and a punishment for an unlawful omission." The Court could not have been more clear in enunciating the difference between a tax and a penalty. It would be very difficult to arise at an example of a penalty than the fine imposed on Americans for failing to purchase mandated and government-approved health insurance.
To be a constitutional tax, a levy must be an excise tax, an income tax, or a proportional capitation tax. The penalty is none of these. An excise tax may be defined broadly as an inland tax (as opposed to a customs duty, etc.) on the production for sale, or sale, of specific goods, or narrowly as a tax on a good produced for sale, or sold, within the country. An example would be a sales or VAT tax. An income tax is based on, obviously, income. It is not assessed based on activity or inactivity. Finally, it is not a proportional capitation tax, which is an equal tax on all individuals. A poll tax, for example, is a proportional capitation tax. Even if the penalty was a tax, it would still violate the Constitution Article I, Section 9 because it would be an unapportioned
capitation tax. FN3
Despite being labeled
an excise tax by Congress, the penalty is unlike any existing excise
tax because it applies to the failure to act by an individual. Existing
failure-to-act excise taxes differ because they apply to entities which
have chosen to partake in particular activities. The provision thus
fails the historic requirements of an excise tax, namely that it apply
to an activity, transaction, or the use of property. The tax also fails
the traditional "pass-on" nature of excise taxes. If the Court were to
approve it as a uniform excise tax, the direct tax apportionment
requirement would be eviscerated. FN4
The Commerce Clause has been coupled with the Necessary and Proper Clause to provide a constitutional basis for a wide variety of Federal laws. "The Congress shall have Power - To make all Laws which shall be
necessary and proper for carrying into Execution the foregoing Powers,
and all other Powers vested by this Constitution in the Government of
the United States, or in any Department or Officer thereof." - Article
I, Section 8, Clause 18. Just because Congress has the power to enact measures that are necessary
and proper to the execution of its power to regulate commerce – in the
case of Obamacare, health care markets – that does not mean that Congress has the
power to do anything and everything that, on the margin, facilitates or
makes more efficient other federally enacted regulatory measures. This
argument is no less untenable if one takes seriously the notion that
there are judicially enforceable limits on the federal government’s
enumerated powers. FN3
In McCulloch v. Maryland, 17 U.S. 316
(1819), the Court held that, while the Constitution did not explicitly
give permission to create a federal bank, it had the implied power to do
so under the Necessary and Proper Clause in order to realise or fulfill
its express taxing and spending powers. This fundamental case
established the following two principles:
1. The Constitution
grants to Congress implied powers for implementing the Constitution's
express powers, in order to create a functional national government.
2. State action may not impede valid constitutional exercises of
power by the Federal government.
"We admit, as all must admit,
that the powers of the Government are limited, and that its limits are
not to be transcended. But we think the sound construction of the
Constitution must allow to the national legislature that discretion with
respect to the means by which the powers it confers are to be carried
into execution which will enable that body to perform the high duties
assigned to it in the manner most beneficial to the people. Let the end
be legitimate, let it be within the scope of the Constitution, and all
means which are appropriate, which are plainly adapted to that end,
which are not prohibited, but consistent with the letter and spirit of
the Constitution, are constitutional," C.J. John Marshall, writing for the majority in McCulloch.
McCulloch does not stand for the
proposition that Congress has plenary power over citizens and the
several states nor has its powers been granted to a body in absolute
terms, with no review of, or limitations upon, the exercise of the
power. "Should Congress, in the execution of its powers, adopt measures
which are prohibited by the Constitution, or should Congress, under the
pretext of executing its powers, pass laws for the accomplishment of
objects not entrusted to the Government, it would become the painful
duty of this tribunal, should a case requiring such a decision come
before it, to say that such an act was not the law of the land."
McCulloch, supra.
In Lambert v. Yellowley, 272 U.S. 581 (1926, the Court upheld a law restricting medicinal
use of alcohol as a necessary and proper exercise of power under the Eighteenth Amendment establishing Prohibition in the United States. The Federal government was empowered to act against the possession or consumption of alcohol. The law was both necessary and proper to carry out its powers authorised under the Eighteenth Amendment. On the other hand, in New York v. United States, 505 U.S. 144 (1992), the Court recognised that it was proper for Congress to address the problem of what to do with radioactive waste and that this national issue
was complicated by the political reluctance of the states to deal with the
problem individually; however, it ruled that the "take title" incentive of the Low-Level Radioactive Waste Policy Amendments Act of 1985 was an attempt to "commandeer" the state
governments by directly compelling them to participate in the federal
regulatory program. The federal government "crossed the line
distinguishing encouragement from coercion." The distinction was that,
with respect to the "take title" provision, the States had to choose
between conforming to federal regulations or taking title to the waste.
Since Congress cannot directly force States to legislate according to
their scheme, and since Congress likewise cannot force States to take
title to radioactive waste, Justice O'Connor, writing for the majority, reasoned that Congress cannot force
States to choose between the two. Such coercion would be counter to the
federalist structure of government, in which a "core of state
sovereignty" is enshrined in the Tenth Amendment. FN4
With the challenges to the individual mandate, however,
Congress is explicitly asserting that the individual mandate is
“necessary and proper” to execute its power under the Commerce Clause.
Moreover, the argument for “necessity” is reasonably straight-forward:
it is necessary to compel all uninsured persons into the insurance pool
to pay for the increased costs being imposed on insurance companies by
the Act. Under the Court’s normal deferential approach, finding
“necessity” won’t be hard. FN2
The problem with the mandate is
whether it is a “proper” means to achieve a constitutional end. The
Court has previously held that mandating state legislatures, New York v.
United States, 505 U.S. 144 (1992) and executive officials, Printz v.
United States, 521 U.S. 898 (1997.) is an “improper” commandeering of
states and therefore violates the Tenth Amendment’s reservation of
powers “to the states.” FN3
It is not contestible that the Constitution established a system of "dual
sovereignty." Gregory v. Ashcroft, 501 U. S. 452, 457 (1991); Tafflin
v. Levitt, 493 U. S. 455, 458 (1990). Although the States surrendered
many of their powers to the new Federal Government, they
retained "a residuary and inviolable sovereignty," The Federalist No.
39, at 245 (J. Madison). This is reflected throughout the Constitution's
text, Lane County v. Oregon, 7 Wall. 71, 76 (1869); Texas v. White, 7
Wall. 700, 725 (1869), including (to mention only a few examples) the
prohibition on any involuntary reduction or combination of a State's
territory, Art. IV, § 3; the Judicial Power Clause, Art. III, § 2, and
the Privileges and Immunities Clause, Art. IV, § 2, which speak of the
"Citizens" of the States; the amendment provision, Article V, which
requires the votes of three-fourths of the States to amend the
Constitution; and the Guarantee Clause, Art. IV, § 4, which "presupposes
the continued existence of the states and . . . those means and
instrumentalities which are the creation of their sovereign and reserved
rights," Helvering v. Gerhardt, 304 U. S. 405, 414-415 (1938).
Residual state sovereignty was also implicit, of course, in the
Constitution's conferral upon Congress of not all governmental powers,
but only discrete, enumerated ones, Art. I, § 8, which implication was
rendered express by the Tenth Amendment's assertion that "[t]he powers
not delegated to the United States by the Constitution, nor prohibited
by it to the States, are reserved to the States respectively, or to the
people." FN4
In Printz, state officials
objected to being pressed into federal service, and contended that
congressional action compelling state officers to execute federal laws
was unconstitutional. FN6 The Court held that the Brady Act purported to
direct state law enforcement officers to participate, albeit only
temporarily, in the administration of a federally enacted regulatory
scheme. FN4
The Court overturned the portions of the Brady Act that attempted to dictate to and use the labour of state officials as an unconstitutional commandeering.
The challenges to the individual mandate
raise the issue of whether mandating all persons to enter into a
contract with a private company is “improper” commandeering of the
people and therefore violates the Tenth Amendment’s reservation of
powers “to the people.” FN5 Because such a commandeering has never been
previously been attempted, the Court will have to address whether it is
an “appropriate”, McCulloch v. Maryland, 17 U.S. 316 (1819), means to
achieving an enumerated end, however “necessary” it may be. Deciding
this question return the Court to the scope of the Commerce Clause.
In
Comstock, No. 08-1224 (2010), nothing about the incarceration of
sexually dangerous persons was alleged to be an “improper” means of
pursuing an enumerated end. The issue was whether or not the statute was
enacted pursuant to an enumerated power. The majority held it was–all
the enumerated powers for which the original criminal incarceration was
the means–while the dissent disagreed. One encouraging aspect of
the case was Justice Kennedy’s denial that the Commerce Clause required
only the sort of rational basis scrutiny described in the Due Process
case of Lee Optical. But even this has no bearing on the challenge to
the individual mandate as the mandate would likely satisfy even
heightened scrutiny for necessity or means-ends fit. Once again, the
issue is not necessity, it is propriety. In this regard, it is very
encouraging to see Justice Scalia joining Justice Thomas’s dissenting
opinion in which Justice Thomas reiterates Justice Scalia’s
characterization in Printz , supra, of the Necessary and Proper Clause
as “the last, best hope of those who defend ultra vires congressional
action." FN5
Identifying the line to distinguish between permissible and
impermissible exercises of the federal government’s power under the
Necessary and Proper Clause is the task at hand, and existing precedent
is only of limited use. The Court’s decisions, from
McCulloch to
Comstock, only go so far in addressing this question. They
clearly confirm that Congress can take some steps beyond the scopes of
the other enumerated powers, but also reaffirm that federal power is
limited, and none of the relevant cases stand for the proposition that
it is for Congress, and Congress alone, to determine what may be enacted
as necessary and proper to the execution of other constitutional
measures. FN5
This is why the individual mandate presents a difficult question. It
is beyond dispute that, on the margin, requiring all Americans to
purchase health care will reduce the costs of seeking to expand coverage
by, for instance, prohibiting health insurers from denying coverage for
preexisting conditions. The same can be said for any measure, however, that increases the
participation of relatively healthy people in health insurance pools or
that increases the average health of those that are insured. So unless
one wants to adopt the view that any provision adopted as part
of some broader legislative scheme is necessary and proper just because
Congress says it is so long as there is some plausible justification
for it’s relation to the broader scheme, one needs to identify some
alternative limit. This is something the individual mandate’s defenders
have yet to do. FN7
How the Court will decide will depend on whether they
take the Wickard v. Filburn, 317 U.S. 111 (1942), and Gonzales v. Raich
(previously Ashcroft v. Raich), 545 U.S. 1 (2005) approach to the
Commerce Clause or the United States v. Alfonso Lopez, Jr., 514 U.S. 549
(1995) and United States v. Morrison, 529 U.S. 598 (2000) route.
The
Court recognised in identified the three broad categories of activity
that Congress could regulate under the Commerce Clause, United States v.
Alfonso Lopez, Jr.,:
* the channels of interstate commerce,
*
the instrumentalities of interstate commerce, or persons or things in
interstate commerce, and
* activities that substantially affect
or substantially relate to interstate commerce
The failure to
purchase health insurance is an INactivity. It doesn't affect commerce
nor is it economic in nature. The Violence Against Women Act, United
States v. Morrison, 529 U.S. 598 (2000), Gun-Free School Zones Act of
1990, United States v. Alfonso Lopez, Jr., 514 U.S. 549 (1995), and The
Child Pornography Prevention Act of 1996, Ashcroft v. Free Speech
Coalition, 535 U.S. 234 (2002) were all struck down because Congress
had attempted to use the Commerce Clause to regulate inactivity and
activity not economic in nature.
As the CBO and CRS told Hillary
Clinton in 1994, the individual mandate is unprecedented and
unconstitutional. "A mandate requiring all individuals to purchase
health insurance would be an unprecedented form of federal action," the
CBO report stated. FN6 "The government has never required people to buy any
good or service as a condition of lawful residence in the United States.
An individual mandate would have two features that, in combination,
would make it unique. First, it would impose a duty on individuals as
members of society. Second, it would require people to purchase a
specific service that would be heavily regulated by the federal
government." Never in the history of the United States had the
Federal government mandated American citizens purchase a
governmentally-approved good or service as a condition of good
citizenship.
In the course of dismissing the
plaintiff’s Commerce Clause challenge, the Judge Steeh has vindicated an
important element of all such pending challenges: this claim of power
by the government is without any precedent in experience or in law. In
Judge Steeh’s words:
“The Court has never needed to address the
activity/inactivity distinction advanced by plaintiffs because in every
Commerce Clause case presented thus far, there has been some sort of
activity. In this regard, the Health Care Reform Act arguably presents
an issue of first impression.”
He's right! Never before in
American history has the Federal Government imposed an economic mandate
commanding that persons engage in economic activity. Given that there is
no current Supreme Court doctrine recognising such power in Congress,
the appropriate stance of a district court judge is to follow Court
precedent and deny this claim of power until the Court decides in due
course to expand its doctrine.
Instead, Steeh accepted the
government’s expansion of Congressional power beyond regulating economic
activity to regulating economic “decisions:
“While plaintiffs
describe the Commerce Clause power as reaching economic activity, the
government’s characterisation of the Commerce Clause reaching economic
decisions is more accurate.”
But this was not “plaintiff’s
description.” It was how the Supreme Court itself described its own
doctrine in each and every Commerce Clause case that allowed Congress to
reach wholly intrastate activity because it was necessary and proper
(N&P Clause) to the regulation of interstate commerce.
By
inventing a new “economic decisions” doctrine FN5, Steeh has gone beyond the
Commerce and Necessary and Proper Clause doctrines established by the
Supreme Court. He made it up. He disregarded every single Supreme Court
case on the Commerce Clause.
Only the Supreme Court is authorised
to expand its own interpretation of the scope of Congressional power.
Of
course, judges in other challenges are having their opportunity to
opine on whether Congress has the power to regulate any “economic
decision” that may substantially affect interstate commerce. The
“economic decision” not to buy a car, the “economic decision” not to buy
or sell your home, or even the “economic decision” not to have a
physical exam. For make no mistake, if the Court ever accepts the
government’s “economic decision” theory, then there is nothing it cannot
mandate in the future in the name of regulating “commerce . . . among
the several states. FN7
Allowing the federal government to force citizens to buy a private
product would “invite unbridled exercise of federal police powers’’ and Congress will then have the general police
power that both the Constitution and the Supreme Court have always denied
it.
Finally, let’s slay this silly auto insurance analogy that
“constitutional scholars” in DC continue to trot out at every
opportunity. This is such a bad argument that it staggers the
imagination why the administration would *still* be making it. In
fact, I am embarrassed that these people even think that they have the
knowledge and experience to make life and death decisions over American
citizens.
The Federal government CANNOT force you to purchase auto
insurance. Driving is a privilege not a right and the ability of states
to regulate it is very broad. (For those that want to claim that driving is a right, the Court has been very clear that states can regulate driving and, as long as the state presents a compelling interest in encumbering driving, whether right or privilege, it is acting within its constitutional powers. See: Bell v. Burson, 182 F.2d 46 (1971), Hendrick v. Maryland, 235 U.S. 610, 622; Kane v. New Jersey, 242 U.S.
160, 167, Packard v. Banton, 264 U.S. 140 (1924)). States impose the insurance requirement,
not the Federal government because states licence drivers and vehicles.
If you are blind or a user of public transportation or just refuse to
drive, a state is not going to force you to purchase auto insurance.
Drivers carry required insurance to cover *damage done to others,* not
themselves. Driving is, after all, a voluntary activity conducted on
public property (roads); there is no requirement for licencing or
insurance for those who drive only on their private property. People
who don’t drive on public roads aren’t required to buy a licence or the
insurance.
There are additional problems with this analogy as
well. Those who *do* have auto insurance only file claims when
significant damage occurs. Auto insurance doesn’t pay for routine
maintenance, like oil changes, lube jobs, and tire rotation. That’s why
auto insurance is relatively affordable.
Unlike Obamacare, auto
insurance is priced to risk. If a driver lives in a high-crime area,
then the premiums will rise to cover the risks associated with theft.
If a driver has moving violations and accident, his premiums will go up,
or in some cases, the insurer will cancel the policy. Other risk
factors are factored into price, as well. Due to their propensity for
causing losses, the youngest and oldest drivers pay more. Those who
drive well and present a lower risk get rewarded with lower premiums.
Right now, the federal government is preventing insurers in some
instances from risk-pricing health insurance to impose
government-approved *fairness.* Or, since the Obama administration
loves the auto insurance analogy, your premiums will rise to compensate
for the 18 year-old kid with 6 moving vehicle violations and 2 totaled
automobiles. We will all pay more because the incentives for good
behaviour, defencive driving, and reasonable maintenance have been
removed.
Finally, can we please direct the extinguisher and put
out the fire insurance analogy? If there is any analogy worse than the
auto insurance dog, it is fire insurance laugher. If we forced insurers
to write comprehensive policies on burning homes, we would have no
insurers left in the market. In fact, IT IS NO LONGER INSURANCE. IT IS A
COMPENSATION POLICY. Obama, Holder and Sebelius want health insurers,
however, to do the same thing — and need the mandate to force all of us
to assume that risk through the higher premiums that subsidise it. And,
by the way, the government is doing *exactly* what they derogate —
forcing insurers to write policies after the accident/fire/illness. Of
course, this is what they want.
Now, I loathe government-run or
even government-directed health care. I hate the NHS and would ONLY
wish it on my worst enemies. If we get stuck with this lemon a/k/a
Obamacare, I have only one, small favour to ask of you socialists,
please put in a good word for me. I want a seat on the Comparative
Effectiveness Board. You won’t have to worry about paying or even
insuring me. I’ll take care of everything. Just, please, give me that
seat because I would love to ration you nuts right out of existence!
FN1 : Barnett, Randy, http://www.cato.org/pub_display.php?pub_id=10942
FN2: Cassidy v. Dumle, 983 F.2d 161 (1992)
FN3: Harrison v. Merrimac, No. 05-1010
FN4: The "Elastic" Clause - The Necessary and Proper Clause, http://emp.byui.edu/MarrottR/101_ElasticClause.pdf
FN5: Preliminary Thoughts on Comstock, Constitutional Decapitation and Health Care, http://papehttp://volokh.com/2010/05/17/preliminary-thoughts-on-comstock/rs.ssrn.com/sol3/papers.cfm?abstract_id=1589190
FN6: The 1.5 Trillion Dollar Fraud, http://www.cato.org/pub_display.php?pub_id=10944
FN7: Further Thoughts on the Virginia Health Care Ruling and the Necessary and Proper Clause, http://volokh.com/2010/12/13/further-thoughts-on-the-virginia-health-care-ruling-and-the-necessary-and-proper-clause/
FN8: http://volokh.com/author/randy/page/2/
FN9: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=410542&http://www.bing.com/search?FORM=DMDTDF&PC=VEOH&q=randy+barnett+%26+necessary+and+proper
FN10: White House Concedes Mandate is Unconstitutional, http://volokh.com/author/randy/page/2/