Liberty Law Blog

The Upside-Down Constitution: A (Diffident) Reply to Mike Rappaport

by Michael S. Greve / 0 Comments

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Heartfelt thanks to Mike Rappaport for his generous and thoughtful posts on The Upside-Down Constitution [“UDC”]. Herewith a two-part reply to two points Mike rightly identifies as crucial: interstate commerce (today’s post), and federal spending (tomorrow’s).

Commerce

Michael R. writes:

While modern federalist/originalists have argued for Congress to protect the competitive [federal] structure – for example, by using the positive Commerce Clause – Michael argues that the Supreme Court is needed and should use the dormant Commerce Clause. While Michael makes some good points here, it is not clear to me that the Supreme Court will always or even generally get things right. But maybe it will, especially if scholars like Michael draw a map for the Court explaining where it needs to go.

Fair enough. Here’s how I look at it:

A competitive federal structure depends on (among other things) free internal trade, conducted on terms of non-discrimination and non-aggression (such as exploitative, “extraterritorial”taxation). Plainly, Congress may use the (affirmative) commerce power to those ends. But it hasn’t done so often, at any time in American history. In 99 cases out of 100, Congress either sits on its duff or else, destroys state competition under the heading of “regulating commerce.” To urge Congress to mend its ways is to howl at the moon. Interstate commerce that depends on Congress to make it free is already dead or at least, condemned to the miserable fate of a regulated utility. The New Dealers understood this, which is why they preached judicial deference to Congress.

UDC argues that the Founders also understood this, long before the New Dealers. Their Constitution reflects a clear recognition that free internal trade is way too important to be left to the dilatory, faction-ridden Congress. The Constitution teems with pro-competitive free-trade rules: the Import-Export Clause, the Tonnage Clause, the Compact Clause, the Contract Clause, the Privileges and Immunities Clause. Overwhelmingly, these provisions do not create federal powers: even under a restrictive understanding of the commerce power, Congress could prohibit the constitutionally enjoined state practices. But you don’t want to run the risk—actually, the near-certainty—that it will fail to do so. Thus, the point of the constitutional arrangement is to establish a pro-competitive baseline and to shift primary enforcement authority to the federal courts.

The central recognition is that judicial authority, unlike legislative authority, can cut only in a pro-competitive direction. Unlike Congress, federal courts can’t make commerce “regular” by making side payments, or by “harmonizing” minimum standards for the states; or by running entire industries as public utilities. All they can do is mow down state impositions on commerce; and the removal of those impediments is the regulation and the competitive baseline. In that important sense, the courts don’t need a map. The only way they can gum up the works is by failing to enforce the rules of the game.

The institutional logic is sufficiently deep to dominate all federal systems. All such systems must produce economic (as well as political) integration. That can be done on “negative” terms: don’t discriminate against out-of-staters; don’t tax anyone except your own citizens; etc. That’s what courts do—not just the Supreme Court (during the 19th century) but also the modern-day European Court of Justice. The ECJ has never had a justice with a pro-competitive bone in his body. Still, on account of the institutional logic, so long as the ECJ was in charge of European integration, it proceeded on Margaret Thatcher’s terms: free trade, and clear sailing all across Europe for the City of London. Alternatively, integration can proceed on “positive” terms, supplied by legislatures. That’s what Lady Thatcher called “harmonization through the back Delors”: we the politicians tell you the people in the various states on what terms you may conduct your business across borders. Yikes.

Two complications. First, the reasoning just sketched doesn’t quite answer the question of the “dormant”Commerce Clause—that is, the notion that the power of Congress to regulate commerce among the states entails a judicial power to enjoin states from regulating that same commerce (even when Congress hasn’t said a peep to that effect). While the Supreme Court has enforced the dormant Commerce Clause (in various permutations) throughout our history, it’s perfectly coherent to argue—on originalist or other grounds—that the specific pro-competitive provisions of the Constitution exhaust the universe of judicially enforceable prohibitions against anti-competitive state practices (exclusio unius, and all that). UDC argues that this reasoning is mistaken. But that’s a long and complicated argument.

Second, Mike Rappaport’s question whether the federal courts will get the competitive rules right applies with full force in areas where you need affirmative ordering rules for interstate commerce, as distinct from mere non-discrimination rules. Erie Railroad, of course, says that federal courts mustn’t supply such “general” common law rules. But they do, in certain enclaves such as maritime law and cases involving federal institutions; and when they do, they usually seem to get the rules right, or at least righter than Congress or states would get them. (Carnival Cruise Lines, Clearfield Trust, and  United Technologies v. Boyle are the classic illustrations. Modern antitrust law, which is completely made up by courts, is another example.) Assuming that is so: why is it so? My hunch is that the federal courts are more likely than Congress or individual states to recognize the inherent reciprocity of interstate (commercial) relations: more “rights” for (citizens of) one state may easily mean fewer rights for (citizens of) another. But that, too, is a long and complicated argument.

 

The Power to Spend

by Michael S. Greve / 1 Comment

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Competitive federalism, Michael Rappaport writes in his thoughtful post, is normatively attractive; and it would be a whole lot healthier with a “Madisonian” Spending Clause—that is, with a constitutional interpretation that limits the power of Congress to tax and spend to the enumerated powers. Under that interpretation, Mike R. says, Social Security and Medicare would be flat-out unconstitutional (and the country would be in much better financial shape). Likewise, the federal transfer programs that wreak havoc  on states and competitive federalism (especially Medicaid) would be unconstitutional. Yet Greve’s Upside-Down Constitution “misses the opportunity” to defend that understanding and instead articulates a “Hamiltonian” interpretation, which (in its strong version, which I believe to be correct) allows Congress, in its virtually unreviewable discretion, to spend money on just about anything it deems in the “general Welfare” of the United States. (The qualifiers are needed because spending must not violate other constitutional provisions. For an easy example, Congress can’t pay states to impose censorship.)

I take the point; but there’s an irony. UDC articulates a constitutional understanding and “construction” that, while anchored in the text, often goes beyond it, to the point of making text-focused originalists (like Mike R.) queasy . At the end of the day, though, I have to go to war with the Constitution we have, not with the Constitution I (or some other libertarian) would like. And for the life of me, I can’t find the “Madisonian” spending riff in the Constitution, or any reasonable construction thereof.

For starters, there is no “Spending Clause” in the Constitution, only a clause granting the power to “lay and collect Taxes [etc.]” and another to “dispose of” the “Property” of the United States. Perhaps, there is no explicit power to spend because Congress doesn’t really spend money; it only appropriates it (and unless it does, it can’t be “drawn” from the Treasury). More likely to my mind, the power to spend is an inherent legislative power (just as there are inherent executive powers and inherent judicial powers, like the stuff we teach as the federal common law of remedies). If that’s right, you can’t have another branch mess with the power. But even if it’s wrong and the power to spend follows, as is widely assumed, from the power to tax, the Madisonian understanding won’t work: the enumerated powers, in conjunction with the Necessary and Proper Clause, already confer the power to tax and spend for the enumerated purposes. (You can deny that, too.  Jefferson did at times: the power to “establish” post roads, he harangued Madison, is only the power to designate pre-existing roads, not to build or improve roads. But that’s strict construction on acid.) So the point of Article I, Section 8, Clause 1 must be to authorize taxing (and spending) beyond enumerated powers limits. Signed, Alexander Hamilton. Joseph Story. Etc. etc. Even the “Old,” anti-New Deal Court embraced this understanding: see Butler v. United States.

The most potent rejoinder comes in the form of this question: why would any sentient human carefully delineate the powers of Congress—and then countenance a legislative power to “spend around” the limitations? The answer, I think, is that the Founders thought the budget constraints should operate on the tax (and borrow) side, not the spending side. Hard-money guys to the bone, they never envisioned the power to float paper money that serves as the world’s reserve currency.

There is, in my estimation, a great deal of wisdom in the Founders’ perspective. But for the power to expropriate our lenders (foreign and domestic), the profligate spending would have ceased long ago. One of these days, it will.

Punishing the Innocent

by Mike Rappaport / 4 Comments

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This is an absolutely awful story.  The story of an innocent man who was wrongfully convicted of murdering his wife and who served 25 years in prison.  This appears to be the real life version of the Shawshank Redemption (and the Fugitive).

The tale is horrible.  Think about it.  A man’s wife is murdered.  That is a horrific exerience.  But instead of receiving the assistance of his family and the state, he is persecuted by them.  He is tried for murder and convicted.  The prosecutors, however, wrongfully fail to provide him with all of the Brady Material (that is, exonerating evidence) that the law requires to be provided to him.  When his lawyers later seek to have DNA testing of the evidence, the prosecutors resist strenuously.  Finally, it turns out that not only was the man innocent, but another murderer got away with this and other murders.

But it only gets worse.  The sister of the murdered wife blamed the husband.  She adopted their son and appeared to have poisoned him towards his father.  While the father was legally allowed to meet his son twice a year (in prison), the son asked to be relieved of this duty.  The father acquiesced.  Thus, the man spent 25 years in prison for a murder he did not commit, was blamed by the community for the murder of a woman he loved, and lost the love of and contact with his son.

The prosecutor’s lame excuse: he was a young prosecutor.

Such wrongdoing is hideous.  Sorry, but based on desserts, the people responsible for withholding the exonerating evidence should be in prison.  For a long time.  For a very long time.

It is perhaps understandable for the wife’s sister to have strongly supported the prosecution of this innocent man.  From her perspective, she suffered a horrible loss and the claims of innocence from her sister’s husband might have seemed like OJ’s statements about the need to find the “real killer.”  But however hard it is, that woman should realize her mistake and apologize.  More importantly, one would hope the son, who had been poisoned, would reconcile with his father.

These cases appear to be harder than they first seem.  The knee jerk reaction of simply putting the prosecutors away for a long time may be counterproductive, since their cooperation is sometimes needed, under existing law, to release the innocent person.  The prosecutors, moreover, may resist DNA testing and other avenues to exoneration in order to protect their own hides.

I am learning more about this area of the law.  But based on what I do know, some significant reforms are needed.  The conviction of an innocent person is a tragedy that should be minimized.  It not only wrongly punishes one person, it also allows the actual murderer to remain free.

The Upside Down Constitution: Part II (The Spending Power)

by Mike Rappaport / 3 Comments

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Having explained some of what I like about Michael Greve’s new book, The Upside Down Constitution, I will now offer one criticism of the book.  Michael believes that Congress has a spending power that allows it to spend money even if there is no other enumerated power.  This is the Hamiltonian interpretation, which allows spending for the general welfare, rather than the Madisonian interpretation, which limits Congress to spending on the enumerated powers.

The Madisonian interpretation would further the competitive federalism that Michael desires much more than the Hamiltonian interpretation in two ways.  First, Michael believes that programs where the federal government raises the funds and then shares those funds with the states – such as Medicaid – are a significant problem.  He seems to believe they are a bigger problem than programs like Medicare, which are exclusively federal.  He believes that the states drive such Medicaid funding and make it bigger than it otherwise would be.

Well, assuming that is true, the best way to stop such programs is to adopt the Madisonian interpretation, which would prevent the federal government from spending for the general welfare.  That would stop federal funding of Medicaid.  Instead, the states would have to raise the funds themselves.

But there is a second way that the Madisonian interpretation would help with competitive federalism.  It would also stop exclusively federal programs, such as Medicare and Social Security, which I believe are bigger and worse than Medicaid.  Under the Madisonian interpretation, Medicare and Social Security could also not be enacted at the federal level.  They would have to occur at the state level, but competitive federalism – without any Supreme Court intervention – would significantly constrain them.  If any state sought to redistribute from the young to the old the way that Medicare or Social Security does, people would leave that state in droves.  Thus, the most problematic features of Medicare and Social Security could not occur if they were required to exist at the state level.

The Madisonian interpretation of the spending power thus would address not only Michael’s problem with grants to the states, but also much exclusively federal spending. Somehow, though, Michael misses this opportunity.  While he justifies his position in the book as saying that federal spending can sometimes produce net benefits, in the real world the costs are enormous and greatly outweigh the benefits.  The only reason that I can figure for why Michael rejects the Madisonian interpretation – and here I am only half kidding – is that he is a neo-Hamiltonian and can’t bear to reject Hamilton’s reading.

Despite this one criticism, let me conclude by repeating my strong praise for Michael’s book.  It is essential reading for anyone who views the Constitution as a means of promoting the liberty and wealth of the nation.

The Shifting Politics of Drug Control

by Franklin Zimring / 0 Comments

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The angry debate about the proper role of the criminal law in drug control does not organize conveniently around the traditional left-versus-right divisions of political geography in the United States.  For a generation now, a civil war of ideas has been waged within the American right between libertarian opponents of state drug control and more traditional law and order conservatives.  At the zenith of the American drug war around 1990, prominent conservative and libertarian intellectuals provided leadership for extreme state controls (William Bennett, the first drug tsar) and radical deregulation (Milton Friedman).  One of the major amusements that liberal criminologists had when visiting drug conferences at the Hoover Institute back then was to witness the passionate division between distinguished law and order resident fellows like Ed Meese and the libertarian Professor Friedman on the ends and means of the American Drug War.  Hoover didn’t have to order out for lively differences of opinion on drugs, then or probably now.[1]  Continue Reading →

Friday Roundup, June 8th

by Richard Reinsch / 0 Comments

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  • Damon Root at Reason points to the obvious counter example in accusations of judicial activism if the Supreme Court strikes down Obamacare.

The Upside Down Constitution: Part I

by Mike Rappaport / 1 Comment

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As Michael Greve noted earlier, the two of us participated in a Federalist Society Teleforum on his new book, The Upside Down Constitution.  The podcast based on the teleforum should be up in the near future.  But in the meantime, I thought I would do a couple of posts based on my remarks.   

Michael’s book is an extremely interesting one that is a pleasure to read.  But what stands out most about the book is its distinctive approach.  Virtually no one among legal academics has the same approach as Michael.  As a result, I probably learned as much from this book as I have from any book on constitutional law.

In this and the next post, I want to make three points about Michael’s book.  The first concerns Michael’s general approach to constitutional law, which is a neo-Hamiltonian.  The second point is praise Michael’s vision of federalism as a normative attractive vision – one that views federalism as involving competition between the states that protects the welfare of citizens.  My third point, however, is a criticism – involving the book’s view of the spending power.  If Michael adopted a different view of the spending power, I believe it would significantly improve the operation of the Constitution, based on his own premises.

Let me start with Michael’s general approach to constitutional law: Michael is a Neo-Hamiltonian.  He believes in free markets, but, unlike most modern federalists, he believes that the state governments are the principal impediment to such markets.  Since that is an unusual position, he is able to pick a lot of low hanging fruit and make a large number of original and important points.

Consider just a couple of the examples. First, Michael argues in favor of Swift v. Tyson rather than Erie Railroad.  He argues that Erie, despite the ordinary assumption to the contrary, allows forum shopping by plaintiffs, who use this power to take advantage of out of state corporate defendants.  Erie, in other words, is part of the motor of the tort liability explosion.  Second, he maintains that the Full Faith and Credit Clause should be read to impose significant constraints on one state taking advantage of its position as the location of the lawsuit.  Third, he embraces the dormant Commerce Clause, which most modern federalists oppose, as an essential means of combating state protectionism.

One of the most striking points that Michael makes is to see the New Deal as a Cartel Machine. The New Deal wasn’t just about nationalism.  That was just a portion of what it did.  Instead, it was about embracing political cartels and government power.  Michael supports this in a host of interesting ways.  He thus showed me another way that the New Deal was a bad thing.  And I had thought my view of the New Deal couldn’t get worse.  I was wrong.

My second point is that Michael offers a normatively attractive vision of constitutional federalism.  He views federalism as involving competition between the states, with the Constitution and federal government operating as a structure to ensure that this competition works well.  The beneficiaries of this system are the people and their welfare.  Michael contrasts this with a less attractive vision of federalism as one that protects the powers of state governments.

A key issue for Michael is to analyze what is necessary for the competitive structure to operate.  In his view, it is essential to prevent the states from exercising their political influence to avoid the competition that the Constitution is supposed to establish.  One distinctive aspect, though, is that Michael believes that competition requires a special role for the Supreme Court.  While modern federalist/originalists have argued for Congress to protect the competitive structure – for example, by using the positive Commerce Clause – Michael argues that the Supreme Court is needed and should use the dormant Commerce Clause.  While Michael makes some good points here, it is not clear to me that the Supreme Court will always or even generally get things right. But maybe it will, especially if scholars like Michael draw a map for the Court explaining where it needs to go.

In my next post, I will offer a criticism of Michael’s book involving his adoption of the Hamiltonian, rather than the Madisonian, spending power.

Widows, Orphans, and Severability

by Michael S. Greve / 1 Comment

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At balkinization, Gerard N. Magliocca poses an intriguing question:

Suppose Congress knows that a certain provision (say about campaign finance) will be constitutionally suspect. They could bundle it with lots of unrelated matters and insert a non-severability clause providing that: “If any portion of this legislation is found unconstitutional by the Supreme Court, then every other portion becomes inoperative.” In that case, the SG would solemnly tell the Justices that striking down the contested provision would deprive orphans of milk, stop the construction of a dam in Utah, and so on. This doesn’t preclude the Court from acting. It just makes it harder.

Obviously, political obstacles would often block this clever stratagem. Legislators, Magliocca notes, might be reluctant to put their pet projects at risk. More important to my mind, legislators do not resent but positively crave judicial supremacy: their willingness to legislate at or beyond the Constitution’s outer limits is predicated on the expectation that the Court will surely excise offending provisions. (This is why campaign finance statutes such as McCain-Feingold don’t contain anti-severability provisions; they contain accelerated review provisions.) Still, the hypo helps to test basic intuitions about legislation and judicial review.

  • Would it be constitutional to yoke unconstitutional provision (A) to widows-and-orphans provisions (B)-(Z)? Putting aside imaginable concerns over interferences with Article III powers and the like, do statutory provisions become non-severable on a mere congressional say-so, or does the term have a substantive (and judicially enforceable) meaning? The question bears on the confused analysis that the Court has applied to statutes that don’t contain a severability clause (such as the Patient Protection Act, which prompted Magliocca’s hypo). In one common formulation of the test, the Court will ding an entire statute if Congress “would not have enacted” the statute without the offending provision. That may make sense with respect to clean, tax-A-and-give-the-money-to-B statutes: the entire transaction falls with the tax. However, in dealing with 2,000-page omnibus statutes, the test is deeply ambiguous. Does “would not have enacted without” mean every interest group favor that was necessary to collect the requisite votes? In that sense, no provision in the PPACA, from the individual mandate (inserted to buy the insurance industry’s assent) to the tanning salon tax to assorted give-aways to the pharma lobby, is severable. Or does the test mean something like functional inter-operability—based on an independent assessment by the Court and, if need be, independent of the actual will of the Congress? (Heads up: coming posts by Tom Christina will discuss the severability issue in detail.)
  •  Magliocca notes that the hypothetical non-severability provision might not immunize offending provisions against “as applied” challenges. Thus, putting aside “overbreadth” challenges, the hypothetical non-severability may not make much of a difference in First Amendment cases. In this event, America’s orphans will have the best of both worlds—access to violent video games, and free milk. However, “as applied” challenges aren’t permitted (at least not officially) in Commerce Clause cases; as the Supreme Court has often put it, plaintiffs may not “excise” their conduct from federal statutes that are constitutional over some range. Should that difference itself make a difference in how we think about the hypothetical provision? Or, should it make us (and the Court) re-think a Commerce Clause jurisprudence that, in prohibiting “as applied” challenges, compels plaintiffs to bring a “facial” challenge to the effect that the challenged provision is unconstitutional in any and all applications?

Food for thought.

Two Cheers for the Fiscal Cliff

by Michael S. Greve / 0 Comments

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Armchair economists and political pundits are wailing about the impending year-end “fiscal cliff.” If Congress and the President do nothing, the Bush tax cuts will expire; an automatic sequester will hit the Pentagon and various “discretionary” programs; and a gaggle of temporary tax cuts, from the alternative minimum tax “patch” to a Social Security payroll tax cut and similar “stimulus” measures are scheduled to terminate. Forecasters warn that the triple hit might subtract something like 2.5 percent from economic output and reduce already-anemic GDP growth by a percent or so. Defense analysts and Pentagon officials warn of budget cuts that would decimate the military and compromise its ability to defend the country.

Other observers—Charles Lane and the Wall Street Journal among them—are considerably more sanguine about the consequences. Regardless of the varying predictions, though, and regardless of the political fireworks that are sure to come, one can defend the “fiscal cliff” as an accidental, unplanned, modest, but nonetheless useful step toward fiscal and political sanity.

For all the harrumphing about political “polarization,” we actually have an overwhelming public consensus: let’s have a really big transfer state, and let’s not pay for it. The result is called “debt,” now officially at 100 percent of GDP (several times that number if you count, as you should, actuarial obligations). Naturally, the politicians heed the consensus. In a splendid essay on “Debt and Democracy,” Chris DeMuth has noted “that debt has become a means of pleasing and placating voters while avoiding democratic accountability, and that the leading efforts to resolve our debt problems are seeking above all to preserve this electoral project.” Just so.  Extant proposals to tackle the debt problem are few and not remotely enough. New federal debt is running at roughly one –third of annual federal expenditures. Even under very optimistic assumptions about future growth, neither the Ryan Plan nor Simpson-Bowles would close the gap, let alone retire existing debt. And even those proposals look politically out of reach.

In that over-all situation, there’s something to be said for deficit reduction by inaction, however ham-fisted or ill-timed it may be in any particular case. In fact, to break the democratically generated debt spiral, we may need to institutionalize a fiscal cliff on a permanent basis. Imagine the following rule: if the projected federal debt for any given year exceeds (say) 1.5 percent of GDP, there will be an automatic tax increase sufficient to cover the excess debt, unless two-thirds of each legislative branch say otherwise and the President consents.

Draconian? Sure.  The sort of prescription Grover Norquist or GOP leaders would urge? Of course not. But there has to be some way of confronting voters with the costs of the transfer state they appear to cherish. Spending restrictions will never curb the impulse to consume future generations’ production now. You have to re-align taxing and spending decisions—in other words, send current voters and taxpayers the full bill for current consumption.

Is that going to happen? Probably not.  That’s all the more reason to view the coming cliff with mixed feelings and, perhaps, as a net plus.

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