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Why Chief Justice Roberts’s Opinion in NFIB v. Sebelius May Ultimately Advance Economic Freedom and Promote Limited-Government and Federalism Values

By Cause of Action Staff

Although at first blush it may appear that Chief Justice Roberts’s opinion in NFIB v. Sebelius upholding the Affordable Care Act’s individual mandate will lead to a dramatic expansion of federal regulatory authority, proponents of economic freedom, federalism, and limited government may be surprised to learn that Chief Justice Roberts’s opinion reaffirmed and strengthened important limits on the scope of federal power.

First, Chief Justice Roberts concluded that the Commerce Clause—even as augmented by the Necessary and Proper Clause—does not allow Congress to regulate inactivity:  “The Court today holds that our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity.”   (The four dissenting Justices—Scalia, Alito, Kennedy, and Thomas—agreed.)  Second, Chief Justice Roberts—joined by Justices Breyer and Kagan—concluded that the Medicaid expansion was unconstitutional, reasoning that the portion of the law requiring the States to “either accept a basic change in the nature of Medicaid, or risk losing all Medicaid funding,” exceeded limits on Congress’s Spending Clause authority.  (The four dissenting Justices reached the same conclusion.)  He not only reaffirmed the principle that “Congress has no authority to order the States to regulate according to its instructions” but placed a new limit on Congress’s exercise of its Spending Clause powers:  Congress can no longer use “coercive” financial incentives to compel States to adopt changes that it wants.  Chief Justice Roberts went so far as to describe the Medicaid expansion as “a gun to the head” of the States and “economic dragooning” that is contrary to our system of federalism and principles of dual sovereignty.

With that said, Chief Justice Roberts’s opinion in NFIB v. Sebelius leaves open important questions that the Court may be required to answer in subsequent cases:

(1)  Although Chief Justice Roberts noted that “Congress’s ability to use its taxing power to influence conduct is not without limits,” it is unclear what those limits are.

(2)  It is uncertain whether Chief Justice Roberts’s conclusion that the individual mandate was unconstitutional under the Commerce Clause is part of the Court’s holding (and thus binding precedent) or merely dicta that other courts may ignore.

(3)  It remains to be seen whether the fact that a majority of the Court believed that the individual mandate exceeded Congress’s Commerce Clause authority indicates a willingness to revisit—and scale back—prior case law interpreting Congress’s authority under that clause expansively.

(4) The extent to which Chief Justice Roberts’s new limiting principle for Congress’s use of its Spending Clause power will leave other federal statutes conditioning receipt of federal money on States adopting federal regulatory and policy mandates vulnerable to constitutional challenge is unclear.

Finally, it is worth briefly noting that Chief Justice Roberts’s opinion upholding the individual mandate should not be read as a ringing endorsement of the Affordable Care Act but rather as an invitation for “We the People”—the ultimate sovereign in our constitutional system of limited government—to resolve the issue through the democratic process:

The Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people.

On January 25, 2012, Cause of Action requested that Acting DHS IG, Charles K. Edwards, investigate whether the U.S. Immigration and Customs Enforcement Agency (ICE) violated federal law by obtaining and subsequently disseminating a video that can be traced to Creative America Campaign, Inc. Creative America has demonstrable ties to special-interest groups that regularly use registered  lobbyists to advocate for passage of legislation that, directly or indirectly, is in ICE’s pecuniary interest.  Further, ICE has violated applicable federal law by using money appropriated by an act of Congress to produce sophisticated, self-aggrandizing  videos that amount to nothing more than propaganda. See CoA’s letter here.

On June 1, 2012, IG Edwards stated that the OIG is “carefully reviewing the allegations made” concerning “whether U.S. Immigration and Customs Enforcement (ICE) has violated Federal lobbying or appropriations law.”  See IG Edwards’ response here.

In an April 24, 2012 New York Times Magazine article entitled, “Earth to Ben Bernanke”  Paul Krugman writes, “Bernanke’s big retreat from F.D.R.-like resolve happened way back in 2003, less than a year after he arrived at the Fed. That month, a Fed staff report rejected many of the ideas Bernanke previously supported — and ever since, Bernanke has spoken only of limited responses to the problem of the zero lower bound.”  By “problem of the zero lower bound” Krugman means:

‘Right now, the Fed believes that it’s facing a weak economy and subdued inflation, a situation in which it would ordinarily cut interest rates. The problem is that rates can’t be cut further. When the recession began in 2007, the Fed started slashing short-term interest rates until November 2008, when they bottomed out near zero, where they remain to this day. And that was as far as the Fed could go, because (some narrow technical exceptions aside) interest rates can’t go lower. Investors won’t buy bonds if they can get a better return simply by putting a bunch of $100 bills in a safe. In other words, the Fed hit what’s known in economic jargon as the zero lower bound (or, alternatively, became stuck in a liquidity trap). The tool the Fed usually fights recessions with had reached the limits of its usefulness.’

Krugman’s solution, it appears, is to cut short-term interest rates and print money in the hope of stimulating private borrowing and spending.  And Krugman believes that such intervention requires F.D.R.-like resolve.  According to the Italian philosopher Georgio Agamben, writing on the concept of the state of exception, “from the constitutional standpoint, the New Deal was realized by delegating to the president (through a series of statutes culminating in the National Recovery Act of June 16, 1933) an unlimited power to regulate and control every aspect of the economic life of the country – a fact that is in perfect conformity with the already mentioned parallelism between military and economic emergencies that characterizes the politics of the twentieth century.”  In other words, from a philosophical standpoint, Krugman’s argument is one in which Bernanke should execute the same kind of authority in fixing the economy that a commander-in-chief would exercise in times of war.  Independent of whether Krugman’s solution is ideal from an economic standpoint, from a legal standpoint, Krugman’s rhetoric signals a mentality in which wide-scale economic regulation no longer becomes the kind of executive action taken in exceptional cases but instead the norm of economic policy.

But regulation does not occur in a vacuum;  implicit within, say, the Affordable Care Act is a concomitant institutional aggrandizement of the Department of Health and Human Services as well as the Internal Revenue Service, both of which gain more authority in spending, rulemaking and enforcement.  Indeed the Dodd-Frank regulations entailed the establishment of the Consumer Financial Protection Bureau.  The Troubled Asset Relief Program entailed an Inspector General office and congressional appropriations that funded investigations (the Financial Crisis Inquiry Commission) and, eventually, spending (the Stimulus plan).  Economic intervention through regulation no longer takes place at the margin, or in the exceptional case, but instead has become the norm – one synonymous with administrative aggrandizement and the expansion of executive power. This has enormous consequences for transparency and accountability of the Executive Branch as the bureaucrats of the Federal Reserve or Consumer Financial Protection Bureau are unelected and any check on their spending comes after-the-fact, when policies and regulations have passed and any form of oversight will fail to retroactively remedy the damage regulatory regimes have done to job creation and capital formation in the market.  The American founders conceived of the normal state of American constitutionalism to be one of limited government.  Now this notion has become an exception relegated to the norm of administrative aggrandizement and, worse, overreach in the form of interventionist, enforcement-based (as opposed to cooperative) regulatory schemes and spending buttressed by an unchecked, unaccountable bureaucracy. Such executive power in the United States has been traditionally justified in times of war where martial law becomes a necessity for purposes both exceptional and expedient.  Constitutional rights to due process, habeas review, and the Third Amendment prohibition against the quartering of soldiers in “any house, without the consent of the owner” were seen as permanent limits against executive aggrandizement during times of war where national defense may need to subrogate other rights.  And yet now the bureaucrats and their regulations have become quartered within our savings and wealth.  And without our consent.

By Dan Epstein, executive director of Cause of Action