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Major limits on the Congress’s powers, in an opinion worthy of John Marshall

David B. Kopel is an adjunct professor of constitutional law, Denver University. Author of the Independence Institute amicus brief on state sovereignty and the Medicaid mandate.

“The States are separate and independent sovereigns.” So affirms the Court today by a 7-2 vote, in the most important decision ever defining the limits of Congress’s power under the Spending Clause.

While the constitutional implications are tremendous, the practical effect on state budgets may be even greater. Today (and from now on!), states do not need to provide Medicaid to able-bodied childless adults. Likewise, states today have discretion about whether to provide Medicaid to middle-class parents. Undoubtedly, some states will choose to participate in the ACA’s massive expansion of medical welfare, but fiscally responsible states now have the choice not to.

It’s true that the ACA contained a promise that the federal government would pay for most of the ACA expansion in the next several years. But history has shown that planning one’s budget based on fiscal promises from Congress is reckless.  While much of the legal commentariat treated the Medicaid mandate as a throwaway issue, the precedents against it were stronger, more numerous, and more recent than those involving the individual mandate. Since the late 1980s, the Court has repeatedly affirmed the central importance of state sovereignty in our constitutional structure. The Court’s sovereignty decisions have involved not only the Commerce Clause, but many other enumerated congressional powers, ranging from the Patent Clause to section 5 of the 14th Amendment. Today, the Court affirms that the Spending Clause is just like the rest of Congress’s powers: it too must conform to the principles of state sovereignty which pervade the Constitution, and which are affirmed by the 10th Amendment and given additional protection by the 11th.
During the late 1930s and early 1940s, a supine Court abdicated its constitutional duty of enforcing constitutional limits on Congressional power. It was then that Chief Justice Stone called the 10th Amendment a “truism.” United States v. Darby, 312 U.S. 100, 124 (1941). Today, Darby’s characterization of the 10th Amendment must be understood according to the literal meaning of “truism”: a self-evident or obvious truth. It is self-evident that when the People of the United States ratified the Constitution, they gave Congress and the national government only some of the sovereignty which had previously inhered in the States.

In South Dakota v. Dole, 483 U.S. 203 (1987), a divided Court had upheld a conditional grant under the Spending Clause: if states did not raise their drinking age to 21, then states would lose 5% of their federal highway grants. Chief Justice Rehnquist’s majority opinion characterized the cut-off as “a relatively mild encouragement to the States.” He also cautioned that a cut-off might be so severe as to be unconstitutionally coercive, infringing the States’ rights to self-government. Since then, academics have struggled to figure out a test for when a cut-off might violate South Dakota v. Dole. Lower federal courts have never enforced Dole’s anti-coercion rule.

Today, for the first time, a federal court finds that a spending cut-off violates Dole. In Dole, the revenue at issue amounted to less than ½ of 1% of the state’s budget. The Medicaid cut-off, however, constitutes at least 10% of a typical state’s budget. So “In this case, the financial ‘inducement’ Congress has chosen is much more than ‘relatively mild encouragement’—it is a gun to the head.”
The Chief Justice seems to be saying that ½ of 1% is OK, and 10% is obviously far too much. So quantity does have a constitutional quality. Although lower courts which wish to follow the Supreme Court’s guidance will probably conclude, in future cases, that 7% is too much, and 2% is not, the issue is not solely quantitative.
As Chief Justice Roberts explains, the Medicaid mandate significantly changed the program:

The original program was designed to cover medical services for four particular categories of the needy: the disabled, the blind, the elderly, and needy families with dependent children. See 42 U. S. C. §1396a(a)(10). Previous amendments to Medicaid eligibility merely altered and expanded the boundaries of these categories. Under the Affordable Care Act, Medicaid is transformed into a program to meet the health care needs of the entire nonelderly population with income below 133 percent of the poverty level.

Accordingly, transformation is a clear indicia of unconstitutionality. If a federal grant program involves A, and is later expanded to also include B, and Congress threatens to withhold the A funds from states that do not participate in B, the cut-off is unconstitutional.

Under Chief Justice Roberts’ opinion, unconstitutionality does not necessarily require transformation and 10%. He quoted Steward Machine Company v. Davis, 301 U.S. 548 (1937), the first case to articulate the coercion principle. Steward “did not attempt to ‘fix the outermost line’ where persuasion gives way to coercion.” In today’s case, “We have no need to fix a line either. It is enough for today that wherever that line may be, this statute is surely beyond it.” Since the Medicaid mandate is “surely” over the line, we can infer that cut-offs less extreme than the Medicaid mandate may still be over the line.

The analysis I have discussed above is from Part IV-A of Chief Justice Roberts’ opinion, which was joined by Justices Kagan and Breyer. Justice Breyer has previously been unwilling to accept any structural limits on federal power, while Justice Kagan’s views on the subject had been uncertain.

In a dissenting opinion, Justice Scalia wrote — on behalf of Justices Kennedy, Alito, and Thomas — that “Seven Members of the Court agree that the Medicaid Expansion, as enacted by Congress, is unconstitutional.” It is rare to see seven Justices, across ideological divides, declaring unconstitutional a major portion of one of the most important laws enacted by Congress in decades.

Chief Justice Roberts aims to emulate Chief Justice Marshall, and NFIB v. Sebelius takes several big steps in that direction.

First, on the Necessary and Proper Clause, NFIB brings interpretation of the clause back to Marshall’s originalist opinion in McCulloch v. Maryland, 17 U.S. 316 (1819): The clause grants Congress no additional powers. Rather, per Marshall and Roberts, the Clause simply restates the background principle that Congress can exercise powers which are merely “incidental” to Congress’s enumerated powers. For example, since the Constitution expressly gives Congress to power to establish the rules of bankruptcy, Congress can enact laws against bankruptcy fraud.

While the Marshall Court had provided authoritative constructions of the Necessary and Proper Clause (McCulloch) and the Commerce Clause (Gibbons v. Ogden, 22 U.S. 1 (1824)), the Spending Clause has lacked one — until today.

The Roberts opinion also brings to mind Chief Justice Marshall’s opinion in Marbury v. Madison, 5 U.S. 137 (1803). Under intense political pressure from a president and his allies who demand that the judiciary submit to their unchecked will, the Chief Justice gives them the result they want in a particular case. Yet wrapped within that victory is a dramatic strengthening of the power of the federal courts to check the current President and Congress, and every future one.

In Marbury, the strengthening was the affirmation of judicial review itself. In NFIB, it is the first decision  striking a Spending Clause enactment because of coercion; the Necessary and Proper Clause restored to its pristine 1819 status; and a vibrant, broad construction of the commerce clause limits from United States v. Lopez, 514 U.S. 549 (1995).

None of this comes for free. Marbury was unjustly denied his commission as Justice of the Peace for the District of Columbia. Chief Justice Roberts’ ruling that the individual mandate is justified under the Tax Power is intellectually indefensible. He expressly says that the mandate is not a direct tax (e.g., a tax just for being alive). Accordingly, if the tax is constitutional, then it must be some form of “indirect tax”—such as an excise tax, or a duty. He writes that the individual mandate merely “makes going without insurance just another thing the Government taxes, like buying gasoline or earning income.” (p. 32). Taxes on buying gasoline, or on the salary from your job, are straightforward excise taxes.

But the problem for Roberts is that excise taxes have always and only been applied for doing something (e.g., buying gas) or for owning something (e.g., a carriage). (Hylton v. United States, 3 U.S. 171 (1796).) There is literally no constitutional or tax law precedent for the notion that an individual can be subject to an excise tax merely for choosing not to buy a product. (The only thing that is even close to an exception to this rule is that a trust can be taxed for not distributing its assets pursuant to the terms of the trust. But a trust, unlike an ordinary American citizen, is an artificial legal person which was created for the sole purpose of performing an activity which the trust then refused to perform.)
Some modern scholars say that Chief Justice Marshall, too, had to cheat to get the result he wanted: that Marbury was incorrect to claim that Article III of the Constitution barred Congress from giving the Supreme Court original jurisdiction to issue writs of mandamus. Perhaps so.
But the bottom line is this: whatever political benefit President Obama gains from the continuing legal enforceability of his unpopular health control law and its widely-disliked individual mandate, plaintiffs who wish to challenge congressional and presidential overreaching have much stronger Supreme Court precedent than they did yesterday.

Recommended Citation: David Kopel, Major limits on the Congress’s powers, in an opinion worthy of John Marshall, SCOTUSblog (Jun. 28, 2012, 6:33 PM),