Law & the Courts

The Supreme Court Should Make Politics Local Again

Supporters of Obamacare demonstrate outside the Supreme Court in 2015. (Jonathan Ernst/Reuters)
Conservatives have an opening to restore federalism.

Editor’s Note: The following is the eighth in a series of articles in which Mr. Yoo and Mr. Phillips lay out a course of constitutional restoration, pointing out areas where the Supreme Court has driven the Constitution off its rails and the ways the current Court can put it back on track. The first entry is available here, the second here, the third here, the fourth here, the fifth here, the sixth here, and the seventh here.

With President Trump in the Oval Office, liberals who sought broad national powers during the Obama years have discovered the virtues of federalism. On issues from immigration to the environment to drug policy, they rely on states’ rights to chart a path at odds with that of Washington, D.C.

If this is a sincere conversion — though we have our doubts, since federalism is too often the rallying cry of those whose political party is in the minority — conservatives should welcome liberals into the federalism tent.

Federalism makes states the battlegrounds for some of our nation’s most contentious political controversies. The resistance to the Trump administration’s immigration policies has arisen in cities and states. Hawaii sued to prevent Trump from imposing a “Muslim ban,” though its claims were later rejected by the Supreme Court, while “sanctuary cities” such as San Francisco refuse to cooperate with ICE agents to enforce federal immigration law. Efforts to reverse the Trump administration’s environmental deregulation proceed in state capitals, as do drug laws that legalize marijuana, which federal law still bans.

But liberals have only conservative justices to thank. Restoring the proper balance between the powers of the federal and state government became the major achievement of the Rehnquist Court. And so far, the Roberts Court has continued the “federalism revolution” — with a few glaring exceptions, the most damaging being Chief Justice John Roberts’ 2012 decision to uphold Obamacare. With the confirmation of Justice Brett Kavanagh, the Court can now embark on an aggressive campaign to return federal power to its proper limits without being held back by the concerns of moderate justices such as Anthony M. Kennedy or Sandra Day O’Connor, who hesitated to strike down excessive but popular federal encroachments on the limited Constitution. Constitutional conservatives now have within their grasp their first real opportunity since the New Deal to restore the federal–state balance to something resembling that envisioned in the original Constitution.

Of course, federalism does not just benefit liberals; during the Obama years, conservatives sought refuge in the states. Texas led a group that recently won a victory against Obamacare in court on the ground that the proto-nationalized health-care system violates constitutional limits on federal power. A similar coalition of states sued the Obama administration for its refusal to fully enforce the nation’s immigration laws under the DAPA and DACA programs.

These examples show that federalism will not inevitably slant toward one party or the other because it promotes a diversity of policy. This is just one of the instrumental benefits of decentralized government, which the Court has identified in its “Federalism Revolution” cases. First, states serve as the “laboratories of democracy,” as famed liberal justice Louis Brandeis wrote. They allow the nation to experiment with a variety of policies to solve pressing national problems, with the bad effects of poor choices limited to a state and good ideas able to spread. Second, states allow for the tailoring of government programs to local conditions and different communities. States’ environmental laws, for example, may reflect their weather conditions. Third, smaller governments may better handle certain subjects — such as crime and family policy — both to promote responsive government closer to the people and to divide authority efficiently between the nation and the states. Fourth, federalism promotes state competition via regulation and taxes to attract residents, much as the market creates efficiency by forcing producers to compete to win the business of consumers.

But the mission for the Roberts Court is to take the federalism revolution beyond a focus on effective government. Most European and Asian developed nations, for example, adopt unitary, centralized governments that reject a notion of sovereign states that exercise their own independent powers. Even if federalism proved inefficient, a conservative Court majority guided by originalist principles should still intervene to defend state sovereignty and limit federal power. For the Framers designed a federal government effective at solving truly continental problems, such as national defense and interstate commerce, but not so strong as to threaten liberty. The states play a central role by creating efficient government that can resist the abuse of federal powers. Reinforcing that original structure must provide the lodestar for the Roberts Court.

Our Original Federalism

The genius of the Constitution’s structure is the two-dimensional separation of government power. The horizontal separation is formed from creating three distinct branches of national government that exercise distinct national powers and limit each other through sometimes overlapping powers and other checks and balances. This is our “separation of powers.”

But that moniker is misleading, because there is a second separation of powers embedded in the Constitution: a vertical separation, or federalism, wherein states retain powers that the national government does not have, or exercise concurrent authority in some areas.

By dividing power in both of these ways, the Constitution provides what James Madison called a “double security” for liberty. Influenced by European writers such as John Locke and Montesquieu, and affected by their revolutionary history, the Framers believed that the opposite of dividing power — its concentration — threatened to bring tyranny.

Thus, our Constitution is designed like a pyramid. At the top is the national government, which exercises power that is supreme. But that national power is also limited in scope. At the bottom of the pyramid are the states. Their power can be superseded by national power when there is a clash, but the states’ powers are much broader in scope, meaning in many areas of life only the states have power to act.

Unfortunately, in many ways our constitutional pyramid has been turned upside down. That’s in part because in its relationship with the states, the federal government has come to acquire vast powers. One of its weapons? Money. Lots and lots of money. Most federal policy in education, environment, health, and welfare arrives through states’ adopting federal rules as the price for receiving congressional funds.

With the passage of the 16th Amendment in 1913 — the dreaded personal income tax — the national government tapped into hoards of wealth previously kept from it. But this newfound authority to dip into the pockets of Americans did not grant the national government the authority to spend money in new ways.

Unless the Supreme Court turned a blind eye or authorized new spending powers. And that’s what the court did with its interpretations of what is called the “spending clause.” This clause provides that “the Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.”

At the Founding, there were two main interpretations of the clause. Thomas Jefferson and James Madison believed that this clause did not provide Congress authority for any additional act beyond the enumerated powers described elsewhere in Constitution. Congress could tax and spend only to exercise its enumerated powers, not tax and spend to accomplish whatever it desired.

Alexander Hamilton disagreed. He instead argued that the clause contained a limitation, but it wasn’t the enumerated powers of Congress. Rather, it was the requirement of “common Defence” and “general Welfare.” He argued that the authorization to tax and spend for the general Welfare of the nation provides no limitation on what Congress chooses to plunk down a dollar for, other than that it promote the common defense or general welfare rather than merely local interests.

Ultimately, under the pressure of Franklin Roosevelt’s court-packing plan, the Supreme Court agreed with Hamilton. The Court’s approval created an end run around the Constitution’s enumerated congressional powers. Congress and the president could claim that every law fell under the general welfare, and after losing the New Deal confrontation with FDR, the Court has never second-guessed them. With this authority to spend on any virtually any subject, coupled with the ability to raise huge amounts of money through personal and corporate income taxes, Congress found the spending money it needed to have its way.

Congress assumed an enormous advantage over the states by resorting to constitutional bribery. Congress need only offer cash-strapped states a piece of the pie if they obey the strings attached. What governor or state legislature isn’t willing to trade some of a state’s abstract independence and sovereignty for immediate federal funds? Very few, it seems — witness the number of states that expanded the coverage of their health-care programs in exchange for Obamacare funds.

But spending is not the only encroachment on federalism allowed by the Court. Congress’s other major weapon comes through the commerce clause.

The Constitution authorizes Congress “to regulate Commerce . . . among the several states.” At the Founding, commerce appeared to refer the trading, bartering, selling, and incidental transporting of goods. The Framers sensibly gave Congress this authority to prevent the trade wars and protectionism that had broken out among the states under the Articles of Confederation.

But the Court, again under the pressure of FDR’s attacks, would not let the Constitution get in the way of the New Deal. It reinvented the commerce clause to give the federal government an almost limitless regulatory power. The most infamous example of the Court’s surrender was Wickard v. Filburn (1942).

There the national government had placed limitations on wheat production. Acting pursuant to delegated congressional authority, the Roosevelt administration justified the quotas as necessary to prevent the national markets from being flooded and prices depressed. Filburn, a farmer from Ohio, grew extra wheat, not to sell, but feed to his own animals. But he was fined for growing more wheat than allowed under the laws.

The court upheld the law on the ground that Congress had the power under the commerce clause to regulate any activity that indirectly had a substantial effect on interstate commerce. Growing 260 bushels of wheat, according to the Court, fell under federal power because it would affect the market price for wheat — at least when the effect is aggregated across all the farmers in the nation who engage in this conduct. Of course, under this logic, Congress could claim that virtually any economic or commercial activity, no matter how small, no matter how local, could snowball into a national phenomenon. For the next 60 years, Congress found that just about every activity in the country had at least an indirect substantial effect on interstate commerce — even activities solely confined to a single state.

In short, the Court granted to the national government what had been reserved to the states: a general police power. And under the supremacy clause, whenever Congress decided to wade into an area traditionally left to the states, its laws triumphed.

The Federalism Revolution

Starting in the 1990s, the Supreme Court began to halt the expansion of the commerce clause. But most of the doctrine that has encouraged the growth of the bloated administrative state remains in place. The Court has yet to put the clause on a diet that returns it to its pre–New Deal size.

The Court’s 2012 Obamacare decision displays the manner in which the national government exploits the breadth of existing federalism doctrines to effectively take over an entire area of life. Spending, taxing, and interstate commerce all made an appearance. Even though the Court placed limits on the spending clause for the first time, and turned back an unprecedented use of the commerce clause, it still upheld Obamacare and left most federal regulatory powers untouched.

In Obamacare, Congress used the commerce clause to require all Americans to purchase health insurance. It used the spending power to threaten cut off states from all Medicaid funding if they did not expand medical coverage, and it used the taxing power to impose a penalty on anyone who refused to purchase health insurance.

Ultimately, the Court split the baby. Chief Justice Roberts, writing for himself but joined in principle by the four dissenters (Justices Scalia, Kennedy, Thomas, and Alito) who wrote separately to make the same point, found that the commerce clause could not force people to buy insurance. It held that the power to regulate commerce does not include the power to create commerce so that it can be regulated. For what it was worth, the Court held the line at Wickard: Only once private actors create a market can Congress regulate it under the commerce clause.

Likewise, the Court agreed that Congress could not use its spending power to coerce states into joining a federal program. Obamacare expanded the number of Medicaid recipients. Some states did not want to participate, either because they didn’t want to expand government welfare or because states would increasingly be on the hook for financially covering this expansion. So Obamacare authorized the national government to penalize unwilling states by taking away all existing Medicaid funding. The Court held that punishing states with such large amounts at stake violated the Constitution.

But, demonstrating the seductiveness of the idea of federal power, Chief Justice Roberts joined the four liberal justices to uphold Obamacare’s individual mandate under the taxing power. Following what the majority called a functional approach (that’s code for not following the text and original meaning of a law), the Court concluded that even though Congress considered the fine for not having health insurance a “penalty,” and even though Congress did not rely on its taxing power to pass the law, Obamacare was still constitutional because it kind of looked like a tax and would be constitutional if Congress had passed it as one. The Court assumed that the Constitution placed no subjects off limits to Congress’s taxing powers.

This move by the majority seems to indicate a nearly limitless ability by Congress to tax. And that limitless power could be the death knell for federalism. Take the so-called “Green New Deal” put forth by left-wing Democrats in Congress (some of whom self-describe as socialists). The proposed legislation would require raising additional trillions in taxes to make sure that all energy created in the country comes from clean sources, everyone has a job with the national government, and every home in American is comfortable and environmentally friendly. Under Chief Justice Roberts’s approach to federalism in the Obamacare case, the Green New Deal would have plenty of support from the taxing and spending powers, with little regard for individual liberty or the police powers of the states.

Federalism’s Future

To restore federalism to its proper place in our constitutional order, the Supreme Court must return to the original understanding of the spending and commerce clauses. Congress can tax and spend on activities authorized by the Constitution, as long as that spending is on something that truly benefits the national defense or the welfare of the whole country. Congress may regulate the sale or trade (or transportation incidental to such) of goods that cross state lines.

Congress can do nothing more under these two constitutional provisions. The Court should do away with its New Deal approach to commerce, with its aggregation of indirect effects on commerce; this doctrine has made superfluous almost every one of Congress’s enumerated powers. Critics will complain that an originalist reading of the commerce clause will remove federal control over the environment, education, and health and welfare, among other issues. This may be true. But if the people want the national government to solve every problem and regulate every issue, they should amend the Constitution.

Of course, a robust federalism does not mean every issue where the states and the national government clash will be resolved in favor of the states. Immigration is still a prerogative of the national government (though we would place it with the executive branch rather than the legislative branch, since the Constitution authorizes Congress to regulate only naturalization, which is distinct from immigration). Washington should control defense, security, foreign affairs, and trade, where unified control clearly benefit the nation as a whole.

But many national–state disputes would tip in the states’ favor once the national government lacked authority to spend and act in that area. Or at least the national government’s ability to act would be severely curtailed. And under that constitutionally ordained regime, the old saying that “all politics is local” may once again ring true.

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