You need to be inoculated from some strange but popular notions about the economy. After the inoculation—it won’t hurt much—you can turn off CNBC and skip over most of the economic chatter. It’ll give you time to read Moby Dick. You really should. It’s amazing and is markedly less fictional than the notions here.
Let’s begin with this one: The stock market is predictable. CNBC specializes in it, with its talking, or sometimes shouting, heads. People want certitude, and stock tips provide the illusion. The industry of stock tipping came out of some century-old court decisions that trustees be prudent. The idea was to prevent the trustees from making off with the assets of widows and orphans yet allow for regrettable but unforeseeable losses. Preventing an agent from cheating the principal is the most ancient reason for accounting. But how to be prudent? Well, take sober advice on what stocks will perform. From CNBC.
A closely related notion is that interest rates are predictable. At a private meeting of the governing board of the American Economic Association in 1996, the secretary-treasurer read out, as was his duty, a letter sent in by a naive member. The letter proposed that economists, like every profession around them (statisticians, engineers, accountants, sociologists, political scientists, historians), adopt a code of ethics. After he read the suggestion, an embarrassed silence descended. Economists think of themselves as positivist scientists, without a need for ethical codes. Then one of the smart-alecks in the room dropped into the silence a suggestion: “The first rule should be ‘Never predict interest rates.'” Everyone laughed.
Why do the sophisticated economists laugh at stock tips and interest-rate predictions? The answer is another question: “If you’re so smart, why aren’t you rich?” One might call it the American Question. If Ms. Jones, an investment counselor, knew the future of financial prices, she could get a second mortgage on her house and make a fortune. An unlimited fortune, in fact, because she could reinvest the profits. So why is she wearing a suit from JCPenney? And why is she selling tips to you for a modest commission?
The American Question is a fair one to ask of anyone who claims to know the future price of a thing or an event on which you can speculate. Paintings. Houses. The Kentucky Derby. The date of the next recession. The identity of the next president. If there’s not a direct market in it, you can invest in things correlated with it. (Hot tip: The recession’s date is correlated with the next president.)
Notice that the Question goes beyond mere uncertainty about the future, though knowing that, too, is wisdom in this vale of tears. As such wisdom was put by a philosopher and baseball manager, “It’s hard to predict. Especially about the future.” The Danish physicist, Niels Bohr, said the same, on the basis of quantum mechanics. But the American Question is an Uncertainty Principle specifically about an economy of alert human beings: There are no $100 bills, as you will have noticed, lying on the sidewalks of Michigan Avenue.
Enough about prediction. What about policy? Here the proverb is by Robert Burns: “The best laid schemes o’ mice and men/ Gang aft a-gley./ An’ lea’e us nought but grief an’ pain,/ For -promised joy.”
Actually, prediction and policy are Siamese twins, connected by what professors of literature call a “minimal story.” Once upon a time you were in condition C. Then something happened. Now you are in condition not-C. Once upon a time you were poor. Then you took expert advice from Bernie Sanders. Now you are rich.
The policy notion on the left, including Sanders, is that running the economy is easy, and easily achieved in legislation. “What lawyers design,” the lawyer-politicians declare, “will be how it actually turns out. After all, we say so, right here in the whereas-preamble to the legislation—that poor people will be better off if we enforce schemes for rent control, a minimum wage, usury restrictions on consumer loans, tariffs on goods supplied to Walmart, ordinances preventing Walmart from opening downtown, trade-union restrictions on entry to professions, and industrial policy to pick winners to be subsidized out of free public money.”
It’s childish. Since when has adding weight to a racehorse improved its speed? Adding weights on Peter to pay Paul can’t make both better off, with rare exceptions such as taxes to finance elementary education for Paul’s kids. Most such laws cause deadweight loss to the society taken as a whole and regularly damage poor Paul.
There are two popular responses, both also childish. One response, favored now by many in the GOP, says that making manufacturers better off by protecting them from competition has no cost in making the Farmer Joads of the country worse off by raising the prices of consumer goods. But of course the accounting here is simply wrong. The Joads are screwed by protection, sure enough.
The other theory, much favored by the Democrats, is that the prices charged by Peter, the rich businessman, are like taxes—mere extractions and not vital signals from customers and suppliers. Fat Peter, the Dems imagine, accumulates gold in the back room. The struggle on the picket line or in Congress to extract that gold will make poor Paul better off. Pile weights on Fat Peter’s business, such as paid vacations and higher wages and lower hours. Keep doing it. Mine that unlimited gold.
Yet the sum of wages and working conditions is not determined by bargaining strength or by legal weights on business. It’s determined by productivity—what people produce. There’s no free lunch, dears, or else we could make the minimum wage $100 an hour and rents $0 a square foot with no damage to the very poor. Don’t believe it.
And one last: The Federal Reserve controls interest rates. This is the notion that the very tip of the tail, the federal funds rate on interbank loans, can wag the economically relevant dog of long-term interest rates. The financial press swallows it. So do a surprisingly large number of professional economists. Yet bonds alone are $113 trillion, and they are but a small portion of all interest-bearing assets. How could a tiny Fed portfolio of $3.7 trillion, or the tinier federal funds rate, push around the yield on hundreds of trillions in assets? It’s like Farmer Brown thinking he can push around the price of soybeans by withholding his crop or by “setting” a higher price at the local elevator.
That wasn’t so bad, was it? Now get back to Moby Dick, noting that the first mate Starbuck is the economist on board.
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Among the freedoms guaranteed by the First Amendment is the right “to petition the Government for a redress of grievances.” You have a right, in other words, to communicate with the government, to complain about its current policies, and to advocate for new and different ones without fear of punishment or censor. You might call it a right to lobby.
That unlimited right to lobby the lawmakers who make decisions that affect your life, your family, and your fortune is one that Sen. Elizabeth Warren (D–Mass.) thinks American businesses should not have. The candidate for the Democratic presidential nomination has proposed taxing corporate lobbying. Expenditures between $500,000 and $1 million would be taxed at 35 percent. Spending over $1 million would face a 60 percent tax rate, which would jump to 75 percent above $5 million. Some nonprofits would be exempt, but the tax would hit trade associations as well as corporations.
Warren’s campaign estimates that if the rule had been in place over the last decade and businesses had made no changes to their lobbying activities, it would have raised about $10 billion in government revenue. But the point isn’t really to generate new funds from taxation. It’s to eliminate much of the advocacy that happens in Washington.
“We can end excessive lobbying,” Warren wrote on Medium in October. The point of the tax is thus to eliminate, or at least severely degrade, a fundamental provision of the Bill of Rights. It is probably unconstitutional and certainly anti-constitutional, in the sense that it is contrary to the spirit of the First Amendment.
That’s not surprising coming from Warren, whose respect for the Constitution knows many bounds. A number of Warren’s vaunted plans—from her wealth tax to her proposed executive order banning fracking—appear to violate constitutional requirements. As a candidate, she has repeatedly demonstrated a willingness to ignore the limitations imposed by the Constitution in the pursuit of her political and policy objectives.
Warren, a frontrunner in the Democratic primary race, wants to look tough on lobbyists and lobbying. Her lobbying tax proposal is pseudo-policy, a veneer of wonky seriousness over dubious populist dogma.
Lobbying might not be held in high esteem by the public, and it can certainly be used to promote destructive policies. But it is a form of protected speech, and that protection is designed to shield those who are not in government from those who are. It is more than a little revealing that Warren, a powerful senator who wants to be an even more powerful president, is proposing to weaken that protection in hopes of advancing her own interests.
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In Florida, Broward County Sheriff Gregory Tony has fired deputy Christopher Krickovich after the deputy was caught on video slamming a teen’s head into the pavement and punching him. Krickovich was one of several deputies who responded to a brawl outside a McDonald’s. One deputy pepper sprayed the teen and slammed him to the ground. That’s when Krickovich jumped on the teen, hitting him and slamming his head. Krickovich says he was afraid the teen would fight them or try to run. The department’s Professional Standards Committee had recommended Krickovich not be disciplined. But Tony reversed that decision. The deputy who pepper sprayed the teen is still under investigation.
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The Fifth Circuit decided Texas v. United States, the challenge to the constitutionality of the ACA. The panel divided 2-1. Judges Elrod and Engelhardt found that (1) the Plaintiffs have standing, (2) the individual mandate was unconstitutional, but (3) remanded for further proceedings on severability. Judge King dissented. My first post considered whether the individual plaintiffs have standing. My second post considered the merits. This third post will address severability.
The majority’s severability analysis begins at p. 44. The dissent’s severability analysis begins at p. 84.
Judge Elrod’s decision demonstrates, once again, Justice Thomas’s influence. In Murphy v. NCAA, Justice Thomas called on the Court to reconsider its approach to standing doctrine. The lower courts, of course, cannot discard Supreme Court doctrine and follow a concurrence. Nor can the Justice Department urge a lower court to follow Justice Thomas’s approach. But the federal government, as well as the Fifth Circuit majority, have–within the bounds of precedent–put Justice Thomas’s concurrence on the wall.
The majority explained:
Justice Thomas’ concurring opinion goes further, providing two reasons why navigating between the Scylla of poking small but critical holes in complex, carefully crafted legislative bargains and the Charybdis of invalidating more duly enacted legislation than necessary stands “in tension with traditional limits on judicial authority.” Murphy, 138 S. Ct. at 1485 (Thomas, J., concurring). “[T]he judicial power is, fundamentally, the power to render judgments in individual cases,” and severability doctrine threatens to violate that vital separation-of-powers principle in more than one way. Id. (Thomas, J., concurring).
The Fifth Circuit, in accordance with Thomas’s opinion, has ordered a remand to determine which provisions of the ACA in fact injure the plaintiff; only those provisions can be enjoined. I anticipated this salutary move in my post-oral argument entry. I wrote:
Could DOJ simply urge a court to adopt Justice Thomas’s approach? I think not. This approach would effect a revolutionary change in the way courts approach severability. Lower courts, including the 5th Circuit, lack the ability to jettison long-standing doctrine. But what if DOJ could quietly guide the courts towards the Thomas approach, without saying so? I suspect that DOJ is taking this exact approach in the Obamacare litigation. . . . I am not aware of any precedent that supports this position–DOJ cites none. Rather, I see this framework as a means to implement the Thomas concurrence.
In any event, the government is not troubled by the lack of precedent. Why not? Because the Thomas concurrence is premised on a jurisdictional argument.
Moreover, this remand is consistent with a recent concurrence by Judges Oldham and Ho in an en banc case.
Once you understand these dynamics of the case, the specifics of the majority opinion make a lot more sense. Specifically, Judge Elrod provides a way to operationalize the Thomas concurrence–through a remand:
On this question, we remand to the district court to undertake two tasks: to explain with more precision what provisions of the post-2017 ACA are indeed inseverable from the individual mandate; and to consider the federal defendants’ newly-suggested relief of enjoining the enforcement only of those provisions that injure the plaintiffs or declaring the Act unconstitutional only as to the plaintiff states and the two individual plaintiffs.
What should happen on remand?
Second, the district court opinion does not do the necessary legwork of parsing through the over 900 pages of the post-2017 ACA, explaining how particular segments are inextricably linked to the individual mandate.
The court identifies some provisions of the ACA that would not cause any obvious injury to the plaintiffs:
Take, for example, the ACA provisions in Title IV requiring certain chain restaurants to disclose to consumers nutritional information like “the number of calories contained in the standard menu item.” Or consider the provisions in Title X establishing the level of scienter necessary to be convicted of healthcare fraud. Without more detailed analysis from the district court opinion, it is unclear how provisions like these—which certainly do not directly regulate the health insurance marketplace—were intended to work “together” with the individual mandate. . . . Whatever the solution to the problem of “legislative guesswork” the district court opinion identifies in severability doctrine as it currently stands, it must include a careful parsing of the statutory scheme at issue to address questions like these.
Yet, the Court leaves the inquiry somewhat open:
We do the same here, directing the district court to employ a finer-toothed comb on remand and conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate. We do not hold forth on just how fine-toothed that comb should be—the district court may use its best judgment to determine how best to break the ACA down into constituent groupings, segments, or provisions to be analyzed. Nor do we make any comment on whether the district court should take into account the government’s new posture on appeal or what the ultimate outcome of the severability analysis should be
The majority suggests that this sort of severability analysis could lead to several possible outcomes. Here, the court cites my article on the case:
It may still be that none of the ACA is severable from the individual mandate, even after this inquiry is concluded. It may be that all of the ACA is severable from the individual mandate. It may also be that some of the ACA is severable from the individual mandate, and some is not.46
46. For an explanation of some, but certainly not all, of the potential conclusions with regard to severability, see Josh Blackman, Undone: The New Constitutional Challenge to Obamacare, 23 Tex. Rev. L. & Pol. 1, 28–51 (2018) (stating that the district court could halt the enforcement of just the individual mandate, halt the enforcement of the entire Act, or halt the enforcement of the community-rating and guaranteed-issue provisions along with the individual mandate, for example). The district court could also issue a declaratory judgment without enjoining any government official.
Second, severability doctrine forces courts to “weigh in on statutory provisions that no party has standing to challenge, bringing courts dangerously close to issuing advisory opinions.” Murphy, 138 S. Ct. at 1487 (Thomas, J., concurring); see also Jonathan F. Mitchell, The Writ-of-Erasure Fallacy, 104 Va. L. Rev. 933, 936 (2018) (“The federal courts have no authority to erase a duly enacted law from the statute books, [but can only] decline to enforce a statute in a particular case or controversy.”41).
41 If that is true, then courts are speaking loosely when they state that they are “invalidating” or “striking down” a law.
No, courts cannot “invalidate” or “strike down” laws. Judges should stop using those malapropisms.
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In this special edition of the Cyberlaw Podcast, we’ve convened a panel of experts on intelligence and surveillance law to examine the many failings of the Crossfire Hurricane investigation of the Trump campaign and Russian influence. We unpack the Department of Justice Inspector General’s report on the FBI’s use of FISA, undercover operatives, and the Bureau’s many errors in the high-stakes matter. We also ask what can be done to cure what ails the FBI—including the IG’s recommendations, FBI Director Wray’s response, and a public order issued by the Foreign Intelligence Surveillance Court.
If you’re looking for a single episode to make sense of the investigation and its faults, you can’t do better than to listen to our team of FISA aficionados. Joining me on the panel:
Bob Litt, former general counsel of the Office of the Director of National Intelligence.
David Kris, who wrote the book on FISA and previously headed the DOJ’s National Security Division, which is responsible for FISA warrants.
Bobby Chesney of the University of Texas School of Law, as well as a founder of Lawfare and co-host of the National Security Law Podcast.
And with that, the Cyberlaw Podcast is going on hiatus for the holidays. We’ll be back in January with more insights into the latest events in technology, security, privacy, and government.
As always, The Cyberlaw Podcast is open to feedback. Be sure to engage with @stewartbaker on Twitter. Send your questions, comments, and suggestions for topics or interviewees to CyberlawPodcast@steptoe.com. Remember: If your suggested guest appears on the show, we will send you a highly coveted Cyberlaw Podcast mug!
The views expressed in this podcast are those of the speakers and do not reflect the opinions of their institutions, clients, family and (mostly former) friends.
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The Fifth Circuit decided Texas v. United States, the challenge to the constitutionality of the ACA. The panel divided 2-1. Judges Elrod and Engelhardt found that (1) the Plaintiffs have standing, (2) the individual mandate was unconstitutional, but (3) remanded for further proceedings on severability. Judge King dissented. My first post considered whether the individual plaintiffs have standing. This post will consider the merits. A third post will address severability.
The majority’s merits analysis begins at p. 33. The dissent’s merits analysis begins at p. 78.
As a threshold matter, the two opinions disagree about whether the ACA imposes a mandate, or merely offers people a choice: purchase insurance or pay a penalty. The Obama administration forcefully advanced the latter position in NFIB. (I addressed this issue at some length in a post titled, The Affordable Care Act Imposes A Mandate. Not a Choice.)
Part III-A of Chief Justice Roberts’s controlling opinion ruled that this “option” reading was not the most natural way to read the ACA. Rather, the ACA is most “naturally” read as imposing a command to buy insurance. The Court only accepted the “option” argument in Part III-C for purposes of the saving construction. Judge Elrod laid out the structure of NFIB:
As a general overview, Chief Justice Roberts’s opinion functioned in the following way. In Part III-A, Chief Justice Roberts said that the individual mandate was most naturally read as a command to buy insurance, which could not be sustained under either the Interstate Commerce Clause or the Necessary and Proper Clause. Though no Justice joined this part of the opinion, the four dissenting Justices—Justices Scalia, Kennedy, Thomas, and Alito—agreed with Part III-A in a separate opinion. In Part III-B, the Chief Justice wrote that even though the most natural reading of the individual mandate was unconstitutional, the Court still needed to determine whether it was “fairly possible” to read the provision in a way that saved it from being unconstitutional. In Part III-C, the Chief Justice—joined by Justices Ginsburg, Breyer, Kagan, and Sotomayor—concluded that the provision could be construed as constitutional by reading the individual mandate, in conjunction with the shared responsibility payment, as a legitimate exercise of Congress’ taxing power. This last part of the opinion supported the Court’s ultimate judgment: that the individual mandate was constitutional as saved.
I’ve created a diagram to explain Part III of Chief Justice Roberts’s controlling opinion.
The mandate/option debate now turns on the status of Part III-C of the controlling opinion. Judge Elrod first focuses on Part III-B, which established the predicate for the saving construction:
In Part III-B, again joined by no other Justice, Chief Justice Roberts concluded that because the individual mandate found no constitutional footing in the Interstate Commerce or Necessary and Proper Clauses, the Supreme Court was obligated to consider the federal government’s argument that, as an exercise in constitutional avoidance, the mandate could be read not as a command but as an option to purchase insurance or pay a tax. This “option” interpretation of the statute could save the statute from being unconstitutional, as it would be justified under Congress’ taxing power. . . .
But this “option” reading is only feasible if the shared-responsibility payment raises revenue.
In Part III-C, the Chief Justice—writing for a majority of the Court, joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan—undertook that inquiry of determining whether it was “fairly possible” to read the individual mandate as an option and thereby save its constitutionality. Chief Justice Roberts reasoned that the individual mandate could be read in conjunction with the shared responsibility payment in order to save the individual mandate from unconstitutionality. Read together with the shared responsibility payment, the entire statutory provision could be read as a legitimate exercise of Congress’ taxing power for four reasons. First and most fundamentally, the shared-responsibility payment “yield[ed] the essential feature of any tax: It produce[d] at least some revenue for the Government.”
In short, Part III-C established that the ACA could be read as offering an “option” to pay a tax because the shared-responsibility payment raises revenue. The choice argument only works within the context of the saving construction.
Judge Elrod reasons that the saving construction is no longer applicable, because the shared-responsibility raises no revenue.
Now that the shared responsibility payment amount is set at zero,34 the provision’s saving construction is no longer available. The four central attributes that once saved the statute because it could be read as a tax no longer exist. Most fundamentally, the provision no longer yields the “essential feature of any tax” because it does not produce “at least some revenue for the Government.”
Therefore, NFIB foreclosed the “option” reading of the ACAif the saving construction falls.
As the individual plaintiffs point out, the Court interpreted the individual mandate as an option only because doing so would save it from being unconstitutional. Accordingly, the intervenor-defendant states must show that the “option” would still be a constitutional exercise of Congress’ taxing power.
And the majority holds that they cannot make this showing.
The dissent adopts an alternate argument advanced by the House of Representatives: the saving construction still applies, because it has become a part of the statutory scheme. Judge King wrote:
The majority pushes aside NFIB’s construction, acting as though the fact that the NFIB Court applied the canon of constitutional avoidance means that its interpretation no longer governs following the repeal of the shared-responsibility payment. But when the Court construes statutes, its “interpretive decisions, in whatever way reasoned, effectively become part of the statutory scheme, subject (just like the rest) to congressional change.” Kimble v. Marvel Entm’t, LLC, 135 S. Ct. 2401, 2409 (2015) (emphasis added).
I’m not sure the dissent’s application of Kimble to the ACA is correct. Kimble considered whether to overrule Brulotte v. Thys Co.(1964). This case provided a construction of federal patent law. Justice Kagan explained in her majority opinon:
Brulotte had read the patent laws to prevent a patentee from receiving royalties for sales made after his patent’s expiration. . . . To arrive at that conclusion, the Court began with the statutory provision setting the length of a patent term. See id., at 30 (quoting the then-current version of §154). Emphasizing that a patented invention “become[s] public property once [that term] expires,” the Court then quoted from Scott Paper: Any attempt to limit a licensee’s post-expiration use of the invention, “whatever the legal device employed, runs counter to the policy and purpose of the patent laws.” In the Brulotte Court’s view, contracts to pay royalties for such use continue “the patent monopoly beyond the [patent] period,” even though only as to the licensee affected. 379 U. S., at 33. And in so doing, those agreements conflict with patent law’s policy of establishing a “post-expiration . . . public domain” in which every person can make free use of a formerly patented product. Ibid.
The Court suggests that Brulotte may not have been correct as an original matter, but declines to overrule this statutory decision. Here is the full paragraph that Judge King’s dissent quotes from:
What is more, stare decisis carries enhanced force when a decision, like Brulotte, interprets a statute. Then, unlike in a constitutional case, critics of our ruling can take their objections across the street, and Congress can correct any mistake it sees. See, e.g., Patterson v. McLean Credit Union, 491 U. S. 164 –173 (1989). That is true, contrary to the dissent’s view, see post, at 6–7 (opinion of Alito, J.), regardless whether our decision focused only on statutory text or also relied, as Brulotte did, on the policies and purposes animating the law. See, e.g.,Bilski v. Kappos, 561 U. S. 593 –602 (2010). Indeed, we apply statutory stare decisis even when a decision has announced a “judicially created doctrine” designed to implement a federal statute. Halliburton, 573 U. S., at ___ (slip op., at 12). All our interpretive decisions, in whatever way reasoned, effectively become part of the statutory scheme, subject (just like the rest) to congressional change. Absent special justification, they are balls tossed into Congress’s court, for acceptance or not as that branch elects.
Extending Kimble to NFIB is a stretch. First, Brulotte was a run-of-the-mill statutory decision that interpreted federal patent law. NFIB decided whether a federal law was consistent with the Constitution. Second, Kimble concerned whether stare decisis was warranted for an old statutory interpretation decision. Kimble, as applied to NFIB, does not implicate stare decisis; rather the question is whether the saving construction still ought to apply. Third, the Kimble court construes Brulotte as creating a “judicially created doctrine” to interpret a federal statute. But NFIB‘s saving construction was canon of avoidance to prevent a constitutional violation. Judge King puts far too much weight on the phrase “effectively” in “effectively becomes part of the statutory scheme.” I don’t think Kagan’s opinion can bear the weight of NFIB. The saving construction exists so long as it can reasonably save the ACA. But no longer.
Judge Elrod offers this response to Kimble:
The dissenting opinion justifies its continued reliance on the saving construction—even though it is no longer applicable—by citing Kimble v. Marvel Entm’t, LLC,135 S.Ct.2401(2015).This approach fares no better. The dissenting opinion quotes Kimble to say that “in whatever way reasoned,” the Court’s interpretation “effectively become[s] part of the statutory scheme, subject … to congressional change.” Id. at 2409.The dissenting opinion correctly acknowledges that the individual mandate was never changed.But what did change was the provision that actually mattered: the shared responsibility payment. When it was set above zero, it could be saved as a tax, even though five justices agreed this was an unnatural reading. It would be puzzling if Congress could change a statute at will, entirely insulated from constitutional infirmity, just because the Court had previously used constitutional avoidance to save a previous version of the statute.
This last point is worth developing further. If the dissent is correct, and saving constructions are baked into statutes, then Congress could subsequently remove the predicate for the saving construction with impunity. Forget the ACA for a moment. Congress would now have a free pass to render a statute unconstitutional, precisely because the Supreme Court already saved it once.
Finally, the dissent argues that the individual mandate, as presently formed, is not unconstitutional because it is not an exercise of legislative power.
Thus, to my mind, the majority’s focus on whether Congress’s taxing power or the Necessary and Proper Clause authorizes Congress to pass a $0 tax is a red herring; the real question is whether Congress exceeds its enumerated powers when it passes a law that does nothing. And of course it does not.
The dissent relies on INS v. Chadha, and suggests that the individual mandate is a legal nullity that cannot be unconstitutional.
Congress exercises its legislative power when it “alter[s] the legal rights, duties and relations of persons.” INS v. Chadha, 462U.S. 919, 952(1983);cf. id. (“Not every action taken by either House is subject to the bicameralism and presentment requirements of Art. I. Whether actions taken by either House are, in law and fact, an exercise of legislative power depends not on their form but upon ‘whether they contain matter which is properly to be regarded as legislative inits character and effect.'”
What exactly is §5000A then? Neither fish nor foul? The majority responds somewhat incredulously to this position:
Finally, we would be remiss if we did not engage with the dissenting opinion’s contention that §5000A is not an exercise of legislative power. This would likely come as a shock to the legislature that drafted it, the president who signed it, and the voters who celebrated or lamented it. It is not surprising that the dissenting opinion can cite no case in which a federal court deems a duly enacted statute not an exercise of legislative power, much less a statute that clearly commands that an individual “shall” do something.38
38 The dissenting opinion’s theory of the “law that does nothing”results in some bizarre metaphysical conclusions.The ACA was signed into law in 2010. No one questions that when it was signed, §5000A was an exercise of legislative power. Yet today, the dissenting opinion asserts, §5000A is not an exercise of legislative power. So did Congress exercise legislative power in 2010, as seen from 2015? As seen from 2018?Does §5000A ontologically re-emerge shoulda future Congress restore the shared responsibility payment? Perhaps, like Schrödinger’s cat, §5000A exists in both states simultaneously. The dissenting opinion does not say. Our approach requires no such quantum musings.
I admit I am partial to this analogy, because I described §5000A in very similar terms:
I close this section with a constitutional riddle. In 2018, the individual mandate was constitutional because the shared responsibility payment was greater than $0. In 2019, the individual mandate became unconstitutional because the shared responsibility payment dropped to $0. But what if Congress, in 2020 or later, increases the shared responsibility payment above $0. At that time—unless the Supreme Court says otherwise—the individual mandate becomes constitutional again. We would have something akin to Schrödinger’s cat, where the mandate fluctuates between constitutional and unconstitutional, depending on the price of the penalty. The answer to this dilemma lies in a simple but widely misunderstood aspect of federal jurisprudence: all courts, including the Supreme Court, cannot and do not actually strike down laws. Statutes remain on the books until they are repealed. The judiciary lacks what Jonathan Mitchell referred to as the writ of erasure.163 Indeed, the Court has already considered the constitutionality of Schrödinger’s mandate.
Judge King responds:
Lest the majority mistake my position and end up shadowboxing with”bizarre metaphysical conclusions,””quantum musings,”or ersatz inconsistencies, Maj. Op. at 44 & n.40 [sic, should be fn. 40], I need to make something explicit at the outset.The TCJA did not change the text or the meaning of the coverage requirement, but it did change the real-world effects it produces. Before theTCJA, the two options afforded by the coverage requirement—purchasing insurance or making a shared-responsibility payment—were both burdensome, but Congress could force individuals to choose one of those options by exercising its Taxing Power. Today, the shared-responsibility payment’s meaning has not changed—it still gives individuals the choice to purchase insurance or make a shared-responsibility payment—but the amount of that payment is zero dollars, which means that the coverage requirement now does nothing. The majority’s contrary conclusion rests on the premise that the coverage requirement compels individuals to purchase health insurance. With this understanding, the majority says that the coverage requirement does exactly what the Supreme Court said it cannot do: compel participation in commerce. See NFIB, 567 U.S. at 552 (opinion of Roberts, C.J.); id. at 652-53 (joint dissent). This conclusion follows fine from the premise, but the premise is wrong. Despite its seemingly mandatory language, the coverage requirement does not compel anyone to purchase health insurance.
Footnote 10 states the crux of the dissent, and indeed reflects what many see as a frustrating aspect of this case:
10. In litigation generally, and in constitutional litigation most prominently, courts int he United States characteristically pause to ask: Is this conflict really necessary?”Arizonans for OfficialEnglish v. Arizona, 520U.S. 43, 75 (1997). The majority would do well if it paused to ask whether it is necessary for a federal court to rule on whether the Constitution authorizes a $0 tax or otherwise prohibits Congress from passing a law that does nothing. The absurdity of these inquiries highlights the severity of the majority’s error in finding the plaintiffs have standing to challenge this dead letter.
I hope to have more to say about the merits later. I will soon move onto a post on severability.
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Despite overwhelming historical evidence demonstrating the folly of government-imposed price controls, modern politicians just can’t seem to quit inflicting them on us. One obvious example involves health care, where price controls on prescription medications always seem to be just around the corner and are now being considered in the rush to eliminate surprise medical bills. Fewer people know about similar efforts regarding the aluminum market, where some politicians are contemplating price controls to compensate victims of the trade war.
Back in March 2018, President Donald Trump announced that he would impose a 10 percent tariff on all imported aluminum (unless an exemption was later granted by the Department of Commerce).
Tariffs have increased the price of aluminum at great expense to metal consumers, and their complaints haven’t fallen on deaf ears. Unfortunately, well-meaning politicians have chosen the wrong path. Instead of fighting the president and demanding an end to the tariffs, they have devised a scheme meant to control the price of aluminum.
The Aluminum Pricing Examination Act targets firms that report on domestic aluminum market transactions. The firms in question merely provide information that benefits both buyers and sellers. But politicians are threatening to bring these firms’ functions under control of the Commodity Futures Trading Commission to satisfy aluminum users who are unhappy with the current trajectory of prices.
It’s understandable that beer brewers and others demanding intervention from elected officials aren’t pleased with rising aluminum prices. But prices reflect underlying market realities that can’t be changed simply by bringing political pressure to bear on those who monitor and report on them. It may come as a surprise to politicians, but removing your fire alarms won’t prevent fires.
This is a common political mistake, as price controls have existed for nearly as long as governments. The Code of Hammurabi, for instance, included a list of mandated prices for many types of labor and services circa 1754 B.C. Other historical examples can be found in ancient Egypt, Greece, and China, each providing ample evidence for the folly of government restrictions on price movements.
But for those elected officials not up on their ancient economic history, there’s no shortage of modern cases from which to learn.
President Richard Nixon thought he could fight inflation with a 90-day freeze on wages and prices, promising “action that will break the vicious circle of spiraling prices and costs.” After the freeze, increases would need the approval of either a “Pay Board” or “Price Commission.” Today, this sounds crazy, but Nixon wasn’t on an island. Markets rallied following his announcement, and the press ate it up.
The result was absolutely disastrous. Inflation—which, at just over 4 percent annually in 1971, wasn’t unreasonably high—shot up into the double digits by the time the controls were lifted.
Nixon’s controls on gasoline persisted through the Carter administration. Domestic exploration and production declined sharply, leading to an influx of foreign oil and long lines at the pumps that many still remember. When President Ronald Reagan finally ended the controls as one of his very first official acts as president, the gas lines immediately ended and gas prices soon plummeted.
Some price controls are ongoing. Rent control has devastated housing markets, particularly in New York and California, by distorting supply and demand. A few lucky individuals make out well, but studies consistently show that almost everyone else—especially would-be renters—will suffer because there’s less incentive to build new housing.
Why do price controls always produce the same result? It’s not complicated, really. Prices give us incentives to produce and consume goods in economically sustainable ways. They convey information.
High prices, for example, signal where more of a particular good is needed. We see this most clearly following natural disasters or other unexpected shocks, which is why anti-price-gouging regulations are counterproductive.
Providing false signals through mandates for artificially low or high prices results in poor market performance. As Nobel Prize-winning economist Milton Friedman best explained, “Economists may not know much. But we know one thing very well: how to produce surpluses and shortages. Do you want a surplus? Have the government legislate a minimum price that is above the price that would otherwise prevail … Do you want a shortage? Have the government legislate a maximum price that is below the price that would otherwise prevail.”
If he’s right that economists don’t know much, then politicians must know even less.
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Tonight, the House approved two articles of impeachment. But Speaker Nancy Pelosi suggested the articles would not be transmitted right away:
The California Democrat said she cannot name impeachment managers to present the House case to the Senate until she knows what that process will look like. The impeachment managers, once named, are the ones who will transmit the articles to the Senate.
“It’s difficult to determine who the managers will be until we see the arena in which they’ll be playing in,” she said.
Pelosi seemed to leave open the possibility the House may never send the articles to the Senate if the two parties there don’t agree to a fair process for a trial. But she pushed back on reporters’ suggesting she raised the notion of an indefinite hold.
“We’re not having that discussion,” Pelosi said when asked if the House may never send the articles.
Pushed on whether she can guarantee the articles will be transmitted to the Senate at some point, the speaker said, “That would’ve been our intention but we’ll see what happens over there.”
I flagged this possibility in a post earlier this week:
My colleague Seth Barrett Tillman suggested another option. The House could approve the articles of impeachment, but not transmit them to the Senate. As far as I can tell, there is no requirement that the House take any action after approving articles of impeachment. For certain, the Senate cannot take any action until the House managers show up. In this fashion, the articles of impeachment would operate as a censure that could stand indefinitely. The House, in theory, could vote for impeachment again in the next Congress.
Consider another possibility. The House could determine that the Senate, with its current leadership and majority, would not afford the House managers a fair trial. (Tribe hints at this option.) Therefore, the House plans to wait until after the election to transmit the articles of impeachment. Of course, that option would be premised on President Trump winning re-election. What better way to start Trump’s second term than by holding an impeachment trial? Indeed, if the Senate flips to Democratic, the Senate trial could serve as a lengthy post-mortem of the Trump administration. However, even if Trump loses, I agree with co-blogger Keith Whittington that a former President could be impeached.
Does the House have an obligation to transmit the Articles? No, for the same reason that the Senate had no obligation to give Merrick Garland a hearing. Both chambers can set the rules of their proceedings. There is no constitutional duty to take any action.
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Rep. Tulsi Gabbard (D–Hawaii), a candidate for the Democratic presidential nomination, voted “present” on the two articles of impeachment against President Trump on Wednesday. This made her virtually the only the Democrat to effectively vote against sending the president’s removal to the Senate. Rep. Jeff Van Drew (D–NJ) voted no on impeachment, but is expected to switch parties.
Gabbard is the first-ever representative to vote “present” during an impeachment inquiry, according to The Daily Beast.
In a statement, Gabbard said that Trump is guilty of wrongdoing, but that she could not endorse a “purely partisan process.”
“When I cast my vote in support of the impeachment inquiry nearly three months ago, I said that in order to maintain the integrity of this solemn undertaking, it must not become a partisan endeavor,” said Gabbard. “Tragically, that’s what it has been.”
Gabbard characterized her actions as a “stand for the center”—a center that neither excuses Trump’s wrongdoing, nor supports his ousting mere months before a presidential election.
Regardless of whether you agree with Gabbard’s stance, it’s quite refreshing to see a politician who is willing to go against her own party. The same goes for Rep. Justin Amash (I–Mich.), who left the Republican Party and voted for Trump’s impeachment because he puts his limited government principles before partisanship. In these incredibly tribal times, such independent thinking is incredibly rare. Most members of Congress seem obligated to either defend Trump at all costs—no matter how contemptible his behavior—or advocate his immediate removal from office by any means necessary.
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Today, the US Court of Appeals for the Fifth Circuit issued a 2-1 decision ruling that the individual health insurance mandate is now unconstitutional in the wake of the 2017 tax reform law, which eliminated the monetary penalty that previously been imposed on violators. At the same time, however, it vacated the trial court ruling holding that the the rest of the Affordable Care Act must fall along with the individual mandate, and remanded the case back to district Judge Reed O’Connor for further analysis of which parts of the ACA are “severable” from the individual mandate, and which ones are not. The case, initially filed by twenty GOP-controlled state governments last year, will continue on remand, and the one thing that can safely be said about it is that this litigation is far from over.
I agree with most of what co-blogger Jonathan Adler writes in his post about the ruling. Here, I add a few additional points on the severability issue. While the Fifth Circuit did not resolve that question, it did make it difficult for Judge O’Connor to simply repeat his earlier ruling that the entire ACA must go.
In her majority opinion, Judge Jennifer Elrod ruled that the individual mandate is now unconstitutional because, with the repeal of the attached penalty, it can no longer be considered a tax, which is the only reason why it was upheld by the Supreme Court in its 2012 decision in NFIB v. Sebelius. Unlike Jonathan and most other commentators, I think this part of the case is actually important. I explained the reasons why here. I therefore agree with and welcome the part of the Fifth Circuit’s decision ruling that the mandate is now unconstitutional.
Most observers, however, do not care much about the fate of the now largely neutered mandate. Their focus is on the fate of the rest of Obamacare, which depends on the resolution of the severability issue. On that point, the Fifth Circuit has essentially ordered Judge O’Connor to go back to square one:
Although we understand and share the district court’s general disinclination to engage in what it refers to as “legislative guesswork…,” we nevertheless conclude that the severability analysis in the district court opinion is incomplete in two ways.
First, the opinion gives relatively little attention to the intent of the 2017 Congress, which appears in the analysis only as an afterthought despite the fact that the 2017 Congress had the benefit of hindsight over the 2010 Congress [that initially enacted the ACA]: it was able to observe the ACA’s actual implementation. Although the district court opinion states that burdening insurance companies with taxes and regulations without giving them the benefit of compelling the purchase of their product is “a choice no Congress made,” it only links this observation to the 2010 Congress. It does not explain its statement that the 2017 Congress’ failure to repeal the individual mandate is evidence of an understanding that no part of the ACA could survive without it.
Second, the district court opinion does not do the necessary legwork of parsing through the over 900 pages of the post-2017 ACA, explaining how particular segments are inextricably linked to the individual mandate. The opinion lists a few examples of major provisions and cogently explains their link to the individual mandate, at least as it existed in 2010. For example, the opinion discusses the individual mandate’s interplay with the guaranteed-issue and community-rating provisions—all of which are found in Title I of the ACA—analyzing how Congress intended those provisions to work and how they might be expected to work without the individual mandate. But in order to strike the delicate balance that severability analysis requires, the district court must undertake a similar inquiry for each segment of the post-2017 law that it ultimately declares unlawful—and it has not done so. Instead, the district court opinion focuses on the 2010 Congress’ designation of the individual mandate as “essential to creating effective health insurance markets” and intention that, for at least one set of legislative goals, the individual mandate was intended to work “together with the other provisions” of the ACA….On this basis, and on the views of the dissenting Justices in NFIB addressing the ACA as it stood in 2012, the district court opinion renders the entire ACA inoperative. More is needed to justify the district court’s remedy….
It may still be that none of the ACA is severable from the individual mandate, even after this inquiry is concluded. It may be that all of the ACA is severable from the individual mandate. It may also be that some of the ACA is severable from the individual mandate, and some is not. But it is no small thing for unelected, life-tenured judges to declare duly enacted legislation passed by the elected representatives of the American people unconstitutional. The rule of law demands a careful, precise explanation of whether the provisions of the ACA are affected by the unconstitutionality of the individual mandate as it exists today.
In one sense, the Fifth Circuit is inviting the district court to do a complete do-over, and in the process leaves all options open. After all, Judge Elrod’s opinion specifically says that final decision could end up ruling either that “none of the ACA is severable from the individual mandate” or that “all of the ACA is severable.” And, of course, there are lots of intermediate options between these polar opposites.
The Fifth Circuit has “direct[ed] the district court to employ a finer-toothed comb on remand and conduct a more searching inquiry into which provisions of the ACA Congress intended to be inseverable from the individual mandate,” without predetermining the outcome of that inquiry. However, Judge Elrod also emphasizes that the trial court must consider the intent of the 2017 Congress that neutered the individual mandate, not just that of the 2010 Congress that initially enacted the ACA.
To the extent that the intent of the 2017 Congress gets any significant weight at all, it is difficult to conclude that any other part of the ACA cannot be severed from what’s left of the individual mandate. After all, if the 2017 Congress really believed that the mandate was essential to the workings of any other part of the Act, it would not have rendered it virtually toothless, while simultaneously leaving all other parts of the law in place. Along with a cross-ideological group of other legal scholars, Jonathan Adler and I developed this point in greater detail in two amicus briefs we have filed in this case (see here and here). I also addressed this issue in my post criticizing Judge O’Connor’s trial court ruling.
In addition to the need to consider the intent of the 2017 Congress, Judge O’Connor will also have to give due weight to a recent Fifth Circuit en banc decision holding that courts addressing severability issues should sever as little of the statute in question as possible. That, too, will make it hard to
Overall, I largely agree with the analysis of severability in Judge Carolyn Dineen King’s dissenting opinion in the Fifth Circuit, where she emphasizes that 2017 Congress already decided the issue, leaving little for courts to do:
The majority has identified the most glaring flaw in the district court’s severability analysis: the district court “gives relatively little attention to the intent of the 2017 Congress, which appears in the analysis only as an afterthought.” When one takes this fact into account, there can be little doubt as to Congress’s intent.
We have unusual insight into Congress’s thinking because Congress was given a chance to weigh in on the ACA’s future without an effective coverage requirement and it decided the ACA should remain in place. By zeroing out the shared-responsibility payment, the 2017 Congress left the coverage requirement unenforceable. If Congress viewed the coverage requirement as so essential to the rest of the ACA that it intended the entire statute to rise and fall with the coverage requirement, it is inconceivable that Congress would have declawed the coverage requirement as it did….
For this reason, I agree with Judge King that the Fifth Circuit probably should have just ruled that all of the rest of the ACA is severable from the mandate, without remanding the case back to the district court. But I can also understand the majority’s desire to have the trial court go over each relevant provision of the ACA with a “fine-toothed comb” to see whether any of them may be inextricably linked even to a neutered mandate. Given the complexity of Obamacare, such caution is understandable, even though probably unnecessary.
In addition to remanding the severability issue back to the trial court, the Fifth Circuit also remanded the issue of the scope of the relevant remedy (should the trial court again rule that some or all of the rest of the ACA is inseverable from the mandate). The key issue here is whether the right remedy is a nationwide injunction or one limited to the plaintiff states. The latter could lead to a difficult situation, where some or all of the ACA is operative in some parts of the country, but not in others.
When Judge O’Connor does eventually redo the severability analysis, the issue is likely to come right back to the Fifth Circuit, as whichever side loses is likely to appeal. But if the Fifth Circuit is at all serious about the need to give weight to the intention of the 2017 Congress and to sever as little as possible, it is unlikely that much—if any—of the rest of the ACA will ultimately fall along with the individual mandate.
Thanks to the Fifth Circuit decision, the Obamacare severability litigation is likely to continue for a long time to come. But the end result is unlikely to be the end of Obamacare, or anything close to it.
As I have emphasized before, we should be cautious about making predictions on the future of ACA-related litigation, because expert predictions on that score—my own included—have often been wrong in the past. Still, today’s ruling does not bode well for those who want the courts to use severability analysis to strike down all or most of the rest of the ACA in addition to the individual mandate.
NOTE: Although I have joined two amicus briefs in this case, the opinions expressed in this and other posts about it reflect only my own views, not necessarily those of the other scholars who joined the briefs.
This might also be a good place to point out that I did not join these briefs because I am a fan of Obamacare. Much the contrary. I authored an amicus brief against the Obamacare individual mandate in the initial 2011-12 challenge to its constitutionality, and also wrote a coauthored book and variousarticles arguing that it and some other parts of the law are unconstitutional. I would be happy to see the ACA repealed. But that is no reason to butcher severability doctrine in the present case.
In addition to the strictly doctrinal reasons to avoid doing so, I also worry that instituitonalizing a theory of inseverability broad enough to bring down the rest of the ACA along with the neutered mandate, would lead future courts to be reluctant to invalidate unconstitutional elements of large, complex laws. If virtually any provision of a law can become the proverbial nail that loses the entire battle if it is removed, many judges are likely to refuse to remove the nail, even if it is unconstitutional. Conservatives and libertarians who hope to use this case to get rid of Obamacare should consider the possibility that doing so might handicap future efforts to curb unconstitutional big-government programs.
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