Archive for January 2011
Lots of write-ups today on Judge Roger Vinson’s opinion out of the federal district court in Pensacola, Florida striking down the individual mandate and, due to a lack of a severability clause, the entirety of Obamacare. I don’t plan on adding anything to the analysis, but I would like to note a couple of my favorite passages I’ve read so far:
It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force people to buy tea in the first place.
I note that in 2008, then-Senator Obama supported a health care reform proposal that did not include an individual mandate because he was at that time strongly opposed to the idea, stating that, ‘If a mandate was the solution, we can try that to solve homelessness by mandating everybody to buy a house.’
Judge Vinson also cites to the excellent Reason video on the Commerce Clause, featuring Erwin Chemerinsky and John Eastman:
For example, in the course of defending the Constitutionality of the individual mandate, and responding to the same concerns identified above, often-cited law professor and dean of the University of California Irvine School of Law Erwin Chemerinsky has opined that although “what people choose to eat well might be regarded as a personal liberty” (and thus unregulable), “Congress could use its commerce power to require people to buy cars.” See ReasonTV, Wheat, Weed, and Obamacare: How the Commerce Clause Made Congress All-Powerful, August 25, 2010, available at: http://reason.tv/video/show/wheat-weed-and-obamacare-how-t.
Finally, the decision also takes the Broccoli Objection seriously:
[T]here are lots of markets — especially if defined broadly enough — that people cannot “opt out” of. For example, everyone must participate in the food market. Instead of attempting to control wheat supply by regulating the acreage and amount of wheat a farmer could grow as in Wickard, under this logic, Congress could more directly raise too low wheat prices merely by increasing demand through mandating that every adult purchase and consume wheat bread daily, rationalized on the grounds that because everyone must participate in the market for food, non-consumers of wheat bread adversely affect prices in the wheat market. Or, as was discussed during oral argument, Congress could require that people buy and consume broccoli at regular intervals, not only because the required purchases will positively impact interstate commerce, but also because people who eat healthier tend to be healthier, and are thus more productive and put less of a strain on the health care system. Similarly, because virtually no one can be divorced from the transportation market, Congress could require that everyone above a certain income threshold buy a General Motors automobile — now partially government-owned — because those who do not buy GM cars (or those who buy foreign cars) are adversely impacting commerce and a taxpayer-subsidized business….
As I said here, it may be politically unlikely now that Congress would require every American to eat more broccoli. But given the administrative demands and practical goals of the new healthcare regime, such a mandate would be downright prudent. It waits only for liberal political will to surge again. This is why we write this stuff down in a Constitution, and why we pay judges to take it seriously.
As I pointed out in an op-ed in the Sacramento Bee last year, one of the reasons runaway public employee pensions poses such a different problem is because California’s courts have steadfastly undone voters’ efforts to make it easier. At least three provisions of the California Constitution, for example, make retroactive pension agreements void ab initio. Yet, the Second District Court of Appeal out of Los Angeles last week brushed aside each of these important citizen taxpayer protections to side instead with the public employee union. (Full opinion here.) As I explain below, California taxpayers have done what they’re supposed to: they enshrined prohibitions in their state constitution to avoid amassing large public debts. It is instead our elected officials—such as Jerry Brown, who empowered public employees to unionize—and our judges who have failed our state. Indeed, despite recently proposing an aggressive budget, Governor Brown still refuses to go after low-hanging fruit when it comes to pension reform.
The Court of Appeal’s recent blow to taxpayers and their constitutional protections thus takes California another step decidedly closer to a populist uprising that will lead us either to another wave of initiative amendments, or to revolt.
Basic Facts in Orange County v. Association of Orange County Deputy Sheriffs
The basic underlying facts of the Orange County pension case are straightforward. The Orange County Board of Supervisors approved an amended AOCDS contract in December 2001 that increased union members’ pension from a “2% at 50” formula to a “3% at 50” formula. This allowed members to receive on retirement the product of 3% of their last year’s salary, times their total number of years worked. Thus, with the stroke of a pen, the County instantly accrued approximately $100 million of additional, unfunded pension liability. This liability was based on years the union members had already worked, and they were required neither to make additional contributions nor to perform additional work in exchange for their 50% increase in pension benefits for those years.
The two provisions of the California Constitution at issue in the Orange County lawsuit are the prohibition on indebtedness and the prohibition on compensation for work already performed. However, the Second District Court of Appeal refused to enforce either of these important constitutional limitations. The court provided scarce rationale for its decision, instead relying on prior cases—which as previously explained, provided even less rationale for their decisions.
To understand the significance and the deliberateness of the court’s refusal to apply the law, a brief history of the three constitutional provisions will be helpful.
History and Purpose of California’s Prohibition on Debt and Retroactive Compensation
First, the debt limitation at article XVI, section 18 prohibits any state or local government from “incur[ring] any indebtedness or liability in any manner or for any purpose exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the voters of the public entity voting at an election to be held for that purpose.” This basic restriction was included in the original state constitution in 1879 in consideration of the turnpike, canal, and railroad boom of the 1820s and ‘30s, the Panic of 1837, and the subsequent surge of tax increases adopted to pay state debts accrued during the boom. Prior to 1840, no states had adopted constitutional debt limitations and, as a result, dangerous debts accumulated during the transportation boom of the first half of that century. In New York, which had accumulated the highest debt in the nation (due in large part to financing the Erie Canal), the chair of the Constitutional Convention of 1846 warned: “unless some check was placed upon this dangerous power to contract debt, representative government could not long endure.”
The debt limitation was Californians’ response to the demonstrated problems facing local governance. Nor were they alone. Between 1840 and 1855, 19 states enacted constitutional debt limitations. In New York, which had accumulated the highest debt in the nation (due in large part to financing the Erie Canal), the chair of the Constitutional Convention of 1846 warned: “unless some check was placed upon this dangerous power to contract debt, representative government could not long endure.” Thus, to prevent another destructive cycle of hasty overinvestment—followed by decades of indebtedness—Californians have, from the moment of statehood, forced their municipalities to operate within their financial means. As the California Supreme Court acknowledged in the 1896 case of McBean v. City of Fresno,
[T]he framers had in mind the great and ever-growing evil to which the municipalities of the state were subjected by the creation of a debt in one year, which debt was not, and was not expected to be, paid out of the revenues of that year, but was carried on into succeeding years, increasing like a rolling snowball as it went, until the burden of it became almost unbearable upon the taxpayers. It was to prevent this abuse that the constitutional provision was enacted.
Following a debate on whether and how much to cap municipal debt—e.g., at 2% or 5%—the idea of caps were ultimately abandoned in favor of submitting large public works proposals to the people for a two-thirds vote, along with a “sinking fund” for paying back the principal sum within twenty years of contracting the debt.
Second, the limitation on “extra compensation” at article XI, section 10 prohibits any local government from “grant[ing] extra compensation or extra allowance to a public officer, public employee, or contractor after service has been rendered or a contract has been entered into and performed in whole or in part . . . .” Like the debt limitation, this prohibition also appeared in the 1879 Constitution in response to concerns about government officials exploiting their connections and influence to obtain increased compensation beyond the terms of their original contracts. During the debates during the constitutional convention, it was expressed “[t]he trouble is not in regard to the salaries which the officers receive according to law, but as to the compensation which they receive outside of the law… [by] surreptitious methods.” As another delegate explained:
what the people of San Francisco do want is not so much a reduction of salaries, but they want to know exactly what salary the officers are to receive. The trouble is not in regard to the salaries which the officers receive according to law, but as to the compensation which they receive outside of the law … it is this, uncertain amounts that come from commissions and other surreptitious methods whereby men get money for services not rendered. It is against these that the people rise up and cry out, and not against the regular, square, honest compensation of officers.
Later case law would cramp the constitutional ban on extra compensation by allowing charter cities to escape the ban. Not amused, Californians in 1970 reaffirmed the prohibition by enacting the current article XI, section 10, explicitly applying the ban to all local governments and reversing prior cases holding otherwise.
The Court of Appeal’s Opinion
Though the language and purpose of these two constitutional provisions are straightforward, the court declined to enforce either of them. The reasons provided, however, are far from satisfying.
With respect to the constitutional prohibition against incurring indebtedness, the court drew a distinction between “debt or liability,” on the one hand, and what the court refers to as “unfunded actuarial accrued liability”—better known as the $100 million of unfunded pension liability accrued the moment the County signed the 3% at 50 plan in 2001. “Unfunded actuarial accrued liability,” the court held, is not a “debt.” Instead, it is “an actuarial estimate projecting the impact of a change in a benefit plan.”
The County anticipated that linguistic machinations might be employed to escape the Constitution’s effect, and so offered that the definition of “indebtedness” as defined by the California Supreme Court “encompasses ‘obligations which are yet to become due as [well as] those which are already matured.’” The court casually dismissed this authority, however, stating “[t]his unexceptional statement does not control our case.” Instead, the court held that “[a]n unfunded liability such as a UAAL is not created at the time of the award of enhanced benefits, but occurs over years ‘and may have been avoided entirely if, for example, the retirement fund experienced better than expected investment returns….’” Of course, this may be said about any debt that has not yet come due, as it may be discharged through accord and satisfaction, novation, forgiveness, etc. To say this makes it other than a debt robs the word of any concretes to which it could ever apply, and nominates it for removal from our lexicon altogether.
Incidentally, yesterday I attended the annual Federalist Society Western Conference at the Reagan Library, where pension reform and this case were discussed. When a panelist read the above quoted language from the decision making the empty distinction between “debt” and “an actuarial estimate projecting the impact of a change in a benefit plan,” the crowd of lawyers could not restrain a very loud groan.
With respect to the constitutional prohibition against extra compensation, the court was less creative. California courts have elsewhere availed themselves of a Nuremberg Defense by citing other opinions that, without explanation, elevated pension rights to a class by itself. However, even these cases did not stand for the proposition that Section 10—the prohibition against retroactive compensation—does not apply to pensions. Yet, the court drew this inference anyway.
With some relief, the court explained it did not carry the burden to explain its conclusion that pensions, and only pensions, are entitled to exclusion from the important constitutional prohibition against extra compensation. Instead, the court explained that “[i]f this creates an anomaly in the law, it is one sanctioned by the California Supreme Court.” But this is not true. While it is an anomaly, it was not sanctioned by the Supreme Court with respect to Section 10’s prohibition against extra compensation. More importantly, that Supreme Court case, Miller v. California, only explains that pensions are simply another form of compensation for work previously done. It does not lend any rationale to support to the proposition that extra pension may be paid by for work previously done.
Simply put, the court did not offer any analysis to explain its refusal to enforce the Constitution. It merely cited other cases that conferred special status on pensions—also without any analysis for doing so. Referring to prior cases in lieu of providing a rationale is an increasingly abused practice among judges, particularly in cases like the one here, in which those prior cases are equally empty of reason. It is a problem Jonathan Swift described this way in Gulliver’s Travels:
It is a maxim among these lawyers that whatever has been done before, may legally be done again: and therefore they take special care to record all the decisions formerly made against common justice, and the general reason of mankind. These, under the name of precedents, they produce as authorities to justify the most iniquitous opinions; and the judges never fail of directing accordingly.
The recent opinion in Orange County v. AOCDS is only the most recent installment in a line of pension cases that offer scant appeal to common justice and general reason, and instead seek to justify themselves merely by making reference to one another.
In closing, it is worth noting that the opinion was handed down just seven days after oral arguments on January 19. Though I have not been able to find the transcript on the web, I am informed that the AOCDS attorney who presented oral argument before the court—herself a former court of appeal justice—pleaded with the panel something to the effect of “this case concerns pension plans just like yours and mine.” This raises potential ethical issues and suggests the justices may have been required to recuse themselves, particularly if they are likewise beneficiaries of retroactive pensions.
I’ve only been half paying attention, but it seems there’s been a lot talk deriding slippery slope arguments generally, and the “broccoli” argument with respect to the Individual Mandate specifically. Andrew Koppelman argues that, to present a true slippery slope, there has to be an actual likelihood of “slipping”:
The Broccoli Objection, as I will call it, rests on a simple mistake: treating a slippery slope argument as a logical one, when in fact it is an empirical one.
This basic point was made long ago in Frederick Schauer’s classic article, Slippery Slopes, 99 Harv. L. Rev. 361 (1985). Schauer showed that any slippery slope argument depends on a prediction that the instant case will in fact increase the likelihood of the danger case. If there is in fact no danger, then the fact that there logically could be has no weight. For instance, the federal taxing power theoretically empowers the government to tax incomes at 100%, thereby wrecking the economy. But there’s no slippery slope, because there is no incentive to do this, so it won’t happen.
Similarly with the Broccoli Objection. The fear rests on one real problem: there are lots of private producers, including many in agriculture, who want to use the coercive power of the federal government to transfer funds from your pockets into theirs. But the last thing they want to do is impose duties on individuals, because then the individuals will know that they’ve been burdened. There are too many other ways to get special favors in a less visible way.
So Congress is never going to force you to eat your broccoli.
In other words, Koppelman argues the “Broccoli Objection,” as he calls it, is just not slippery enough to be a slippery slope. I’m not convinced. First, Koppelman is not coming toe-to-toe with the nature of the objection. The “slippery” element of a slippery slope argument is not a function of likelihood, but rather of the availability of non-arbitrary distinctions. If there is no principled distinction between allowing the government to do something we like and doing something we don’t like, we ought to be skeptical. Slippery slope argument are thus helpful as extrapolation exercises because they help us see what might be coming around the bend if we keep pushing ahead on political rather than legal principles.
But Koppelman isn’t troubled by this because, as he explains, it’s just not likely we’d ever reach the bottom of the slope. Again, I’m not convinced. The federal government might not try to force broccoli on us now, but it’s not conceptually inapposite to a centralized healthcare regime. Precisely the contrary, in fact. Thus, the Individual Mandate is not like the income tax amendment since, as Koppelman admits, a 100% income tax would “wreck the economy.” It’s not merely practically unlikely, then—it’s practically impossible. A broccoli mandate, on the other hand, is currently merely politically improbable. Given the administrative demands and practical goals of the new healthcare regime, however, it would be downright prudent if all Americans gorged on broccoli. Moreover, American’s reluctance toward government involvement in healthcare seems to be slowly waning. Thus, it’s hard to take Koppelman seriously that the political likelihood of something like a “broccoli mandate” couldn’t tack sharply northward in the not very distant future.
Incidentally, it’s also not true that, as Koppelman suggests, the federal government could take all your money just by calling it a tax. At some point, the government’s going to come up against the takings clause. And this is the case for nearly every government power—every grant of Congressional power runs up against some other power held by the executive or the judiciary. But that’s not so with the modifications we’re proposing on the Commerce Clause. Folks like Koppelman suggest that Congress doesn’t need any checks because the real sinister things it might do are unlikely to happen right away.
As for the practical aspect of a broccoli mandate, Koppelman seems to suggest that however you describe the Broccoli Objection, it’s not persuasive because it’s just not realistic the government would ever do something as detestable as force people to eat broccoli. Here we see that Koppelman’s actually after a much bigger prize than winning the Individual Mandate argument, because once we’ve bought into Koppelman’s premise when talking about governmental action, we’ve substituted pragmatic limits for constitutional limits. He even says as much at the end of his post: “If the Supreme Court is going to invent new limits on the legislature, it should do so in a way that has a real chance of preventing actual abuses. Otherwise it is hamstringing the legislature for no good reason.” This is unsettling for those of us still convinced there are certain things the government can’t do not just because we can throw the bums out, but because we already wrote them down. One starts to think God was on to something when he put his “thou shalt nots” on stone tablets.
Steve Bainbridge observes the fun being sucked out of America and fingers plaintiffs’ lawyers as the culprit. I’m no apologist for the tort bar, but consider the problem from the incentives angle. There’s billions of dollars to be had for talented, opportunistic attorneys. It would take a level of self-control unprecedented in human history for them all to willingly leave all that money on the table. Swapping lawyer jokes is cathartic, but it’s not getting us anywhere.
The time-honored jury of peers, on the other hand, is where we would expect some sobriety. Jurors receive just enough to cover the cost of getting to and from the courthouse for each day they sit and listen to the aforementioned bloviating moneybags put on their expertly orchestrated dog and pony show. They have no monetary incentive to help the plaintiffs’ bar suck the fun out of the world. Yet, they tend to go right along with the fun-sucking soulless bloviating plaintiffs’ attorneys. Why? Because they let themselves get swept up in anti-corporatist, redistributionist, populist notions of justice. And, if it’s occurred to you this phenomenon might be self-fulfilling given the likely academic and economic disposition of the folks who have nothing else to do but sit through a weeks’-to-months’-long trial, you are probably using your head.
Thus, the better offhanded explanation for our sickeningly over-lawyered society might be the constitutional guarantee of a trial by jury.
Several months ago, I read about Atlantic writer Ta-Nehisi Coates getting in a huff over certain bloggers’ comparing abortion and slavery. At the time, I was too tied up with work to find out what was going on (and I still am), but it appears Coates is still irritated that people continue to find the analogy between slavery and abortion compelling. Quoting himself in an older post, Coates insists that slaves were not “denied the right to exist”:
Slaves married. Slaves were baptized. Slaves were converted to attend Christianity–and even attended white churches, at times. Slaves and masters exchanged gifts on Christmas. Slaves were allowed to hire themselves out and buy their own freedom. Slaves were manumitted by masters.
Other differences between slaves and fetuses: Slaves were taller. Slaves weren’t soaked in embryonic fluid. Slaves worked outdoors. Obviously, pointing out these sorts of distinctions is childish. The argument is not that abortion is the same thing as slavery. It’s that there are important parallels at a certain level of abstraction. That parallel, obviously, is that in each case, the most fundamental of rights—life and liberty—are deprived based on a crafty legal determination of personhood. Coates’s argument draws our attention to the very different meaning of personhood as it applied to slaves, and that most Americans during the slavery years didn’t really believe blacks weren’t “persons,” only that they were unequal to whites.
Well, of course this was the case. It’s easy, particularly for those who believe in natural law, to see that all people are equally entitled to life, liberty, and the pursuit of happiness, and that attempts to violate this natural law employ pseudo-intellectual machinations. That’s the point: When it came to the legal basis for denying blacks equal rights, just as with fetuses today, the legal meaning of personhood takes center stage.
Yet, apparently without considering the import of the personhood argument when it came to the legal basis for denying blacks equal rights, Coates concludes the analogy of abortion to slavery is all flash and no fire. For all the thoughtful historical points he raises, his unwillingness to cede this basic point does not serve him well.