Politics & Policy

Let’s Taft-Hartley Obamacare

If we can’t repeal it, we can improve it.

It is increasingly clear that the Affordable Care Act is not going to be either completed or abolished, regardless of what happens in November or in any envisionable future election. It is locked in, but in a peculiarly limited way.

Obamacare was an extraordinary, one might say accidental, event of a kind that is very rare in American politics. Such breakthroughs take place only when all the stars are aligned — when one party controls the presidency and both houses of Congress, with the requisite supermajority in the Senate. The parties also need to be aligned within themselves (even when the Democrats had majorities, their conservatives would often vote with the Republicans), and the Supreme Court wild card needs to be taken into account.

This occurred during the Civil War and Reconstruction, the New Deal, and the Great Society. These periods (constitutional “moments” as Yale Law Professor Bruce Ackerman calls them) either formally amend the Constitution or produce “superstatutes” that become locked in because undoing them would require an opposite supermajority. In the meantime, the new programs create constituencies that have an interest in perpetuating the entitlements that they provide.

But Obamacare will not be as locked in as, say, Social Security, the Civil Rights Act, or Medicare. As critics have pointed out, those programs were enacted with bipartisan support. Obamacare has enough shortcomings and complications that it will probably track that most accidental of New Deal legislation, the National Labor Relations Act of 1935, which made organized labor the most powerful interest group in America for half a century.

Known as the Wagner Act for its sponsor, Senator Robert Wagner of New York, the NLRA was an effort to promote collective bargaining in American industry. Apart from those representing certain skilled workers in strategic segments of the economy, American unions were largely powerless to compel employers to bargain with them. The principles of American labor law (individual equality, liberty of contract, and employment at will) gave unions very little to work with, so that fewer than 10 percent of private-sector, non-farm American workers were union members before the Wagner Act.

The organization of most workers, especially of unskilled, easily replaced mass-production workers, required government assistance. The American Federation of Labor (AFL) had long pursued such policies as immigration restriction and had sought exemption from antitrust and tort laws. In 1933 it won a provision, section 7(a), in the National Industrial Recovery Act that guaranteed collective bargaining. However, most employers evaded this through “company unions,” also known as “employee-representation plans,” which many companies introduced in the 1920s as a non-adversarial alternative to outside unions. The AFL considered them company-dominated puppets. In any case, the Supreme Court struck down the whole act in 1935.

Wagner proposed to reenact 7(a) and give it teeth by outlawing company unions and a number of other “unfair” employer practices, which would compel employers to bargain exclusively with whatever union was chosen by a majority of their employees. Wagner’s legislation created an independent regulatory agency, the National Labor Relations Board, to enforce the act and keep labor relations out of the generally hostile courts.

President Franklin D. Roosevelt was initially hostile to the Wagner Act. But he came around after the Supreme Court struck down the NIRA. This and other legislation of the “second New Deal” were implicit challenges to the Court — which Roosevelt made explicit after his 1936 reelection when he asked Congress to let him pack the Court with six new justices.

Almost everyone expected the Court to strike down the Wagner Act. Indeed, many liberals wanted the Court to do so, to highlight the conflict between the New Deal and judicial conservatism. Thus the Wagner Act passed the Senate 63 to 12 and passed the House without a recorded vote. The best explanation for the lopsided majority was not consensus in favor of the bill, but the conviction held by many of its opponents that the Court would strike it down — so why incur the enmity of organized labor for nothing?

To nearly everyone’s surprise, the Court upheld the Wagner Act in April 1937, shortly after Roosevelt had threatened to pack it. Suddenly, the country was saddled with an act that might not have passed at all, and certainly not in as radical a form, without the Supreme Court wild card. However, the Democratic majorities were so overwhelming in 1935 (70 to 20 in the Senate) that the NLRA probably would have passed, albeit by smaller margins, had the assumed Supreme Court strikedown not been a factor.

The public was soon put off by the militant tactics — especially the sit-down strikes — employed by the new unions of the Congress of Industrial Organizations (CIO), which had broken away from the more conservative AFL. Roosevelt packed the NLRB with CIO partisans, which alienated both employers and the AFL. Some large employers, such as U.S. Steel, came to terms with their unions; others, like the “little steel” firms and Ford, held out until the bitter end, when the need for government war contracts forced them to give in. FDR was unable to pack the Court according to his plan, but by 1941 deaths and resignations had allowed him to fill seven of the nine seats on the bench. These New Deal justices interpreted the Wagner Act quite liberally.

World War II brought American unions to the height of their power. Largely because the federal government promoted the unions (government was spending about half of the nation’s GDP by the end of the war), they came to represent about one-third of American workers, a percentage approached again in the mid-Fifties but declining ever since. When the war ended, the unions were determined not to lose what they had gained (as they had after the First World War). They embarked upon a postwar “strike wave” that added to the pains of reconversion from a wartime to a peacetime economy and led to a drive to curtail union power.

When the Republicans won control of Congress in 1946, for the first time since the beginning of the Depression, they enacted the Labor-Management Relations Act (Taft-Hartley). President Truman vetoed it, calling it a “slave-labor bill,” but Congress overrode the veto. (Many believe that Truman expected and actually wanted his veto overridden. He saw that Taft-Hartley was a much-needed correction to the Wagner Act, and this way he could get it while still keeping the support of the AFL and CIO.)  Taft-Hartley did not go so far as to repeal the Wagner Act. Instead, it maintained its fundamental principles while prohibiting some of the most abusive union practices. Most important, it allowed states to adopt “right-to-work” laws prohibiting compulsory union membership. The nation’s labor markets adjusted to the new regime, until today private-sector union membership is about where it was before the Wagner Act.

When the Roberts Court upheld the Affordable Care Act in 2012, we found ourselves again saddled with an act that probably would not have passed at all, and certainly not in so radical a form, had not the president and Democrats in Congress resorted to every trick in the book to enact it. But the Court left enough openings to significantly curtail it. House Republicans have already taken some small steps, as when they repealed an arbitrary $2,000 cap on deductibles in small-business health-insurance plans.

Some have always been there — like allowing interstate competition in health insurance. (Ironically enough, the liberal New Deal Court invited Congress to do this in 1944, and it declined.) The Court has held that Congress cannot force the states to expand Medicaid, and some Republican governors have taken a stand here. Other provisions, such as the religious-freedom exemptions, also present possibilities. More will open up if and when the Republicans take control of the Senate; outright repeal will be a possibility only if and when they take the presidency, too. But we can still have a Taft-Hartley improvement in the meantime.

— Paul Moreno is the director of academic programs at Hillsdale College’s Kirby Center for Constitutional Studies and Citizenship.

Paul Moreno holds the William and Berniece Grewcock Chair in Constitutional History at Hillsdale College, where he is a professor of history and dean of social sciences.


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