Supreme Court Decision Creates Unprecedented Expansion of Federal Powers

Supreme Court Decision Creates Unprecedented Expansion of Federal Powers
August 8, 2012

Maureen Martin

Maureen Martin passed away on February 5, 2013. The Heartland Institute's page in tribute to her... (read full bio)

The Supreme Court’s decision on the constitutionality of the individual mandate to buy health insurance was an unprecedented expansion of federal powers, blindsiding the parties and virtually obliterating the notion that the federal government is one of limited, enumerated powers.

The majority opinion held the government does not have the authority to impose the individual mandate under the Commerce Clause of the U.S. Constitution.

“The individual mandate ... does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce,” Chief Justice John Roberts wrote. “Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority.”

Instead, Roberts found the individual mandate is constitutional under Article I, section 8, which enables Congress to impose taxes to “provide for the common defense and general welfare of the United States.”

Taxation Power Without Limit

Scholars have long debated whether Congress can tax and spend for any purpose, even those not on the list of enumerated powers, or whether the Founders used the term “general welfare” as a sort of constitutional shorthand to mean only spending within the framework of limited federal governmental powers.

This debate stems from the one between James Madison (spending limited to enumerated powers) and Alexander Hamilton (spending on any purpose related to “general welfare”). Hamilton’s argued the federal government can tax and spend even on matters reserved to the states under their inherent police powers, which relate to the health, safety, and welfare of their citizens.

The “general welfare” clause was expressly invoked when Congress enacted legislation creating Social Security. According to the New York Times, it happened like this:

“At a tea party in 1934, Frances Perkins, then the labor secretary, found herself seated next to Justice Harlan F. Stone. . . .

“The secretary freely admitted they were stuck on the administration’s new Social Security bill, and were uncertain on what basis the new program should be founded. Upon hearing this, the justice looked around to see if anyone was listening, leaned over to her, and putting his hand up to his mouth, whispered: ‘The taxing power of the federal government, my dear; the taxing power is sufficient for everything you want and need.’ The secretary excitedly returned to her staff and announced she had made up her mind. They would base the new program on the government’s power to tax.”

In that case, though, the taxing power was specifically invoked by Congress. For Obamacare, by contrast, Congress called the fine paid for failure to comply with the individual mandate a “penalty.” The Supreme Court renamed it a “tax” and found it within the general welfare clause.

Tax Was Tangential to Case

The Social Security legislation used payroll taxes to fund benefits, so the relationship between taxing and spending was in fact direct. In the case of Obamacare, though, the “tax” is peripheral to the main purpose of the legislation, which is to restructure the health care insurance market.

The “tax” is expected to raise a measly $4 billion by 2017, according to a Congressional Budget Office report quoted in the Roberts opinion, compared with health care expenditures that may reach $2.3 trillion in the first ten years, according to Sen. Tom Coburn (R-OK).

As the Landmark Legal Foundation noted in its Obamacare amicus brief, the taxing power has never been used to tax “inactivity,” in this case the failure to comply with the individual mandate. And the Social Security legislation was enacted by a Court cowed by President Roosevelt’s court-packing proposal, so it was unclear whether a more resolute Court would follow this precedent.

When it scheduled oral argument in the Obamacare case, the Court specified four topics to be argued in an unprecedented six hours over three days, yet it did not schedule any argument on the tax issue. The abbreviated discussion in the parties’ briefs concerned whether a “penalty” or a “tax” was involved, not the scope of the taxing power. By using a tangential issue to decide one of the greatest cases of our time, the Court’s majority did an enormous disservice to the nation.

Time to Amend the Constitution

The Due Process clause doesn’t apply to the Court, but it’s tempting to say this decision deprives the American people of their property—their money—without notice or an opportunity to be heard. At the very least, it’s taxation without representation.

So now there is precedent that Congress can adopt legislation ordering Americans to do almost anything it desires, so long as it appends a tax provision, even if this provision is peripheral to the central purpose of the legislation.

Conservative political operatives are using the decision as an opportunity to urge that Obamacare be repealed. But even a successful repeal won’t repair all the damage done by the court’s decision.

The Constitution ought to be amended to make it plain—once and for all—that the federal government may tax and spend only as authorized by an enumerated power. Only through this process will the American people have an opportunity to be heard on the epic issue of federal governmental power.

Maureen Martin, J.D. (mmartin@heartland.org), is senior fellow for legal affairs at The Heartland Institute.

Maureen Martin

Maureen Martin passed away on February 5, 2013. The Heartland Institute's page in tribute to her... (read full bio)