Saturday, March 27, 2010

Minutes after President Obama signed the health care bill, constitutional challenges were filed.

Their key is the Commerce Clause, which, judicially redefined, is the sole constitutional rationale justifying many federal regulatory powers (which is why in law schools it is often called “the everything clause”).

Under the Articles of Confederation, states were imposing duties on other states’ goods. The Commerce Clause was designed to take that abusive power from the states by giving Congress the power to regulate interstate commerce; “regulate” meant “to make regular or normal” or “to remove impediments,” but not to authorize federal control following the far different current meaning of “telling others what to do.”

Federalist 11 indicates the Commerce Clause’s intent as a limitation on states rather than federal carte blanche, “prohibitory regulations, extending… throughout the states,” without which “this intercourse would be fettered, interrupted and narrowed by a multiplicity of causes.”

Federalist 42 describes the main purpose as “the relief of the States which import and export through other States, from the improper contributions levied on them by the latter.” Rather than authorizing federal dictation of anything remotely related to commerce, it provides “restraints imposed on the authority of the States,” citing Switzerland, where “each Canton is obliged to allow to merchandises a passage through its jurisdiction… without an augmentation of the tolls,” as its main illustration.

The Commerce Clause’s narrow intended scope was cemented in Federalist 45: “The powers delegated by the proposed Constitution to the Federal Government, are few and defined. … The powers reserved to the several States will extend to all the objects, which, in the ordinary course of affairs, concern the lives, liberties and prosperities of the people; and the internal order, improvement, and prosperity of the State.” It was this stringent constraint on federal power that made the Commerce Clause one “few oppose, and from which no apprehensions are entertained.”

Following our Founders’ intent, until 1887, the Commerce Clause was used only to overturn state restrictions on interstate commerce. But then the courts began reinterpreting its ban of state-imposed restrictions into an open invitation to federal dictates, particularly in Wickard v. Filburn, in 1942.

Justice Robert H. Jackson’s opinion eliminated virtually all Commerce Clause bounds on federal powers: “[E]ven if appellee’s activities be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce.” In other words, the federal power to regulate interstate commerce extended to banning (far from “removing impediments” to trade) production (not commerce) occurring in a single state (not among states). Anything judged to have a substantial effect, including any “practices affecting prices” - that is, any business practice - became fair game for federal regulation. We see the results in the alphabet soup of regulatory agencies now engulfing us.

However, since 1995, the Supreme Court has rediscovered the Commerce Clause’s restrictions on federal authority. It found neither gun possession near schools nor violence against women sufficiently related to commerce to authorize federal legislation.

If the Supreme Court follows the Constitution as written, federal health “reform” will be rejected. If Wickard’s almost unlimited discretion is maintained as a valid precedent, it will be accepted. If more recent precedents are followed, it will depend on what the justices deem sufficiently connected to commerce. In particular, does Congress have the power to force people to buy health insurance - to override non-commerce (choosing not to buy) in the name of regulating commerce?

Health care reform offers hope that an important constitutional restriction will be taken seriously again. It also offers risk that it will be further gutted. That alternative is chilling for those without total faith in the federal government. As Chief Justice William H. Rehnquist wrote in the 1995 Lopez ruling: “If we were to accept the government’s arguments, we are hard-pressed to posit any activity by an individual that Congress is without power to regulate.”

Gary M. Galles is professor of economics at Pepperdine University in Malibu, Calif.

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