[by David Schwartz, guest blogger]
Two days ago, in Texas v. United
States, the Fifth Circuit held that the Affordable Care Act (a/k/a “Obamacare”)
is an unconstitutional exercise of the Taxing Power. The Court reasoned that, because
the 2017 Tax Cuts and Jobs Act eliminated the tax for
individuals who failed to comply with the “individual mandate” to purchase health
insurance, the ACA no longer raised revenue, making the individual mandate a
bare regulation and not a tax.
This issue would not
even have arisen but for the 2012 decision in NFIB v. Sebelius that
Congress could not impose the individual insurance mandate under its commerce
power. That ruling was a mistake: whether or not requiring a purchase of health
insurance was itself a commerce regulation, it was plainly necessary and proper
to a regulation of interstate commerce in health care, and therefore a legitimate
implied power under McCulloch v. Maryland. In denying that straightforward
application of the doctrine of implied powers, Chief Justice Roberts relied on
the longstanding canard that states--and with them, our federal system—would be
destroyed unless assertions of federal power are from time to time rejected, notwithstanding
their prima facie validity under McCulloch.
The myth of state destruction has a
long pedigree. Antifederalists during the Ratification debates insisted that
the broad powers granted to the federal government would lead inexorably to a “consolidated”
government, which was the late-eighteenth and nineteenth century word for a “completely
centralized” government in which states were nullities with no meaningful
regulatory power. The proposed Constitution, in the words of one prominent antifederalist,
would empower the national government to “legislate the height of fence posts,”
leaving nothing for state legislatures to regulate. This myth was perpetuated
by the Taney Court, which argued that states held “a sacred right of self-defense”
by which they could defeat prima facie claims of federal power that might touch
on state powers to protect slavery.
As I argue in The
Spirit of the Constitution, this exaggerated fear was perpetuated by a
jurisprudential error: that legislative power must be exclusive rather than
concurrent.
We now know that states can thrive under a concurrent powers regime.
Under modern Commerce Clause doctrine, for example, the federal government has
plenary power to regulate all aspects of the national economy. Yet the states’ powers to
regulate their economies remain vast: with the narrow exception of the Dormant
Commerce Clause doctrine (which prohibits state protectionism), states are free
to legislate on any economic matter unless affirmatively preempted by federal
legislation. While in theory, Congress
could preempt all state regulation on matters substantially affecting interstate
commerce, in practice preemption remains the exception rather than the rule.
Late eighteenth and early
nineteenth century legal thinkers were very confused about the idea of
concurrent powers. Constitutional thinkers repeatedly asserted that powers
granted to the federal government were “surrendered” by the states: not shared, but lost. This
mistaken belief is built into the Tenth Amendment, which provides that “The
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.”
That 1789 text is not an accurate statement of our modern legal regime of concurrent
powers mediated by the doctrine of federal preemption, because states in fact
retain, by sharing, many of the powers delegated to the federal government.
While the Supreme Court in McCulloch
v. Maryland recognized that the federal government and the states held
overlapping taxing powers, the Marshall Court seemed unable to wrap its head
around concurrent powers in general. Chief Justice Marshall in Gibbons
v. Ogden seemed unable to
sort through the question of whether the commerce power was exclusive. Marshall’s colleague, Justice Bushrod Washington, captured the
confused state of thinking perfectly in announcing the judgment of the Court in
Houston v. Moore, 18 U.S. (5
Wheat.) 1 (1820), a case involving the question of federal versus state power
to regulate state militias. “I
am altogether incapable,” Washington wrote, “of comprehending how two distinct
wills can, at the same time, be exercised in relation to the same subject, to
be effectual, and at the same time compatible with each other.”
Following the Civil War, legal
thinkers seemed to understand that the Constitution could and did empower both
the federal and state governments to regulate “the people” concurrently. The
idea that the Constitution created “an indestructible union composed of
indestructible states,” Texas v. White, 74 U.S. (7 Wall.) 700, 725
(1869), could co-exist with the idea that the federal government could exercise
regulatory power over “every foot of American soil.” Ex parte Seibold,
100 U.S. 371, 394-95 (1880). Yet the Court disingenuously re-purposed the myth
of state destruction to support a laissez faire jurisprudence. Asserting that
states would be destroyed as sovereign entities unless they held identifiable “reserved”
powers, the Court enumerated state powers over labor and
production—agriculture, mining, and manufacturing—that the federal government
could not regulate.
The myth of state destruction
persisted through the New Deal. Consider this famous phrase from Justice Benjamin
Cardozo in his concurring opinion in A.L.A. Schechter Poultry Corp. v.
United States, 295 U.S. 495, 554 (1935). Schechter Poultry is the infamous
“Sick Chickens” case, in which the Supreme Court struck down the National
Industrial Recovery Act (“NIRA”), the signature legislation from FDR’s first
100 days in office. The Court’s principal objection to the law was that a local
“code of fair competition” promulgated under the NIRA, which purported to
regulate health standards for commercially sold poultry, was too indirectly
connected to interstate commerce to be a valid exercise of Commerce Clause
power. Cardozo observed that upholding the NIRA would “obliterate the
distinction between what is national and what is local and create a completely
centralized government.”
The idea that a thriving federal
system requires identifiable subject matter “reserved” to the states and
prohibited from federal regulation was killed off—or so we thought—in the late New Deal. It is obviously false: the
states as semi-sovereign regulatory entities continue to thrive today despite a
recognized federal power to regulate virtually all national problems. The
national political process protects federalism because it will always be
practical to devolve a hefty chunk of policy matters to the states. Yet the
myth of state destruction continues to arise, like the walking undead. Cardozo’s
line from from Schechter Poultry was “re-tweeted” as recently as 1995, in
United States v. Lopez, 514 U.S. 549, 566-67 (1995), where the Court
reminded us that it will continue to strike down laws as exceeding the commerce
power. Texas v. United States demonstrates that the myth continues to rear its
ugly head.
