Obamacaid Revisited: Against Balance

Federalism's balance? Forget it.

A  few weeks ago, I took issue with the PPACA plaintiffs’ contention that the statute impermissibly “coerces” states to participate in a massive expansion of Medicaid. The federal government’s brief on this issue is due today. I’m not going to like the feds’ position, either. Both sides, I believe, proceed from a badly flawed federalism premise.

Everyone recognizes that there is no direct, explicit constitutional guarantee against the “coercion” of state and local authorities by the federal government. However, the constitutional structure is widely understood to require a federal “balance” between Washington and the states. While the feds may encourage states to participate in federal schemes (usually, by offering them money), they may not coerce the states’ participation: that would derange the federal balance. The notion of “federalism as balance” is deeply embedded in the Supreme Court’s decisions, the legal literature, and the public federalism debate. In the contentious Obamacare litigation, it is a small patch of common ground among the parties.

It’s a miserable piece of real estate. Any appeal to federalism’s “balance” is pernicious, constitutionally baseless nonsense. Federalism is about a carefully wrought constitutional structure, not a global balance; and one cannot get that structure right until and unless the balance dogma is first put to rest. That’s the agenda for this post. (A more fully developed, footnoted version of the argument appears in The Upside-Down Constitution, which has a longer version of everything.) Monday’s post will apply the argument to the Obamacare litigation.

Printz and Principles

In an instructive law review article, the late Bobby Lipkin collected the contemporary Supreme Court’s references to federalism’s “balance” and showed that the notion is empty. It has no constitutional reference point, and its deployment as an actual constitutional norm—as opposed to high-toned burble to tart up a result reached on other grounds—has absurd implications.  Suppose, for example, that some otherwise constitutional federal law shifts the “constitutionally mandated” balance to the states’ detriment: could we make it up to the states by giving them a power to, say, tax imports from China? Would that make us feel better about our federalism (because “balance” has been restored)? I didn’t think so, either.

Our Constitution contains no explicit or even implicit equilibrating rule. It operates on a very different principle—the allocation of specific (limited, enumerated) powers. Those powers, rightly understood and operating in a particular way, constitute an ascertainable federal structure. The modern case that comes closest to recovering this structure is Justice Scalia’s splendid opinion in Printz v. United States, 521 U.S. 898 (1997).

Printz held that the federal government may not “commandeer” state officers—that is, command them to execute federal laws (in the case at hand, federal gun registration requirements). “Because there is no constitutional text speaking to this precise question,” Justice Scalia derives the anti-commandeering principle from the general structure of the Constitution and, at the end of his opinion, parks it under the Necessary and Proper Clause. Federal laws must be “necessary and proper” to the exercise of some enumerated power; and laws that commandeer state officers are so fundamentally at odds with the constitutional structure as to flunk the “proper” test.

The anti-commandeering principle is absolutely central to the constitutional architecture. Alas, its derivation in Printz is a bit elliptical. The crucial point is to distinguish the forms of federal action: commandeering versus prohibition (or “preemption”).

The distinction rests on Madison’s canonical exposition of the “compound republic” in Federalist 39. The Constitution, Madison writes, is “federal” with respect to the “extent” of the national government’s powers: they are enumerated, and they are limited. The Constitution is “national” with respect to the “operation” of those powers. What he means is that the powers operate directly upon citizens, without the intermediation or assistance of the states. Moreover, under the Supremacy Clause (Art. VI, § 2), the Constitution and laws enacted pursuant to it displace any state law. If the two conflict, you’re governed by federal law, “any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”

The Printz question was not the “federal extent” of Congress’s powers (all assumed that Congress had power to enact gun registration requirements) but their “national operation.” Everyone agrees that the national government’s power to tax and regulate citizens directly marks the crucial difference between the Constitution and the Articles of Confederation (and for that matter the EU): ours is a government over citizens, not governments. The question is whether that power to legislate directly implies a corresponding prohibition against legislating indirectly and upon states. Printz, as noted, holds that it does: if the feds wish to regulate citizens, they must do so directly. Why is this so?

The common formulation of the problem—“direct” versus “indirect” regulation—is a bit misleading. Many constitutional provisions (for example, the prohibitions or Article I, § 10) operate on states rather than individuals, and many enumerated powers authorize Congress to do likewise. The crucial distinction is not between acting (or not) on states but rather between a federal prohibition and an affirmative federal command. The distinction has firm roots in the constitutional text and structure. As just noted, the Constitution imposes many direct limitations on the states, but only three provisions envision affirmative federal commands. Two of these (the Militia Clauses Art. I, § 15-16, and Art. I, § 4, authorizing Congress to “make or alter” state regulations with respect to the time, place, and manner of holding elections for the House and the Senate) are institutionally cabined. The only arguable exception, the Supremacy Clause, specifies the legal effect of federal law, as opposed to creating a new power to run states around the lot; and to the extent that it “commandeers” at all, it extends only to “the Judges in every State,” not to legislatures or executives. In short, the Constitution recognizes the difference between prohibitions and commands, and its commands are so few and conspicuous as to warrant the inference that commandeering is prohibited unless explicitly provided for.

Structure, Not Balance

Why is the distinction between commandeering and prohibition/preemption so central to the constitutional architecture? A tempting answer is that affirmative commands are more odious and oppressive to the states and more upsetting to the federal “balance” than mere prohibitions. But this is false. Put yourself into the shoes of a state airline regulator (they did exist, way back when). Now, the feds propose to get into the act. What’s your choice: a federal law that prohibits you from regulating carriers’ rates, routes, and services; or a law that commandeers you to do so, subject to federal instructions? To ask the question is to answer it. Unlike a fully preempted bureaucracy (which goes out of business), a commandeered state bureaucracy or legislature still gets to capture regulatory rents, collect campaign contributions, and dine with lobbyists. So far as the states are concerned, then, commandeering protects the federal balance far better than does preemption.

The reason for the commandeering/preemption distinction, therefore, has to do not with balance but with structure; not with the interests of “states as states” but with citizens’ constitutional concerns. Prohibitions and their infractions are relatively easy to observe. Commandeering schemes, in contrast, involve massive agency and monitoring problems. When the schemes go awry, federal and state officials blame each other, and citizens have no way of fingering or firing the culprits. This systematic dilution of political transparency and accountability is the operating principle and raison d’etre of the EU and other “cooperative” federal systems. Stateside, in contrast, we insist on holding public officials to account. To that end, coercive authority must be traceable to a single sovereign. Preemption conforms to that principle; commandeering destroys it. In short, the point of Printz, and of the Constitution, is to block intergovernmental conspiracies and to promote political transparency and accountability.

Bargaining with the States

Congress may not commandeer state officials. Importantly, state consent does not remedy this debility. The question remains, however, whether Congress and the states may bargain around the constitutional entitlements—put differently, whether Congress may pay the states, or states may exact payment, for the performance of affirmative duties that cannot be commandeered. The short answer is “yes.” The Constitution does not prohibit either level of government from entering such bargains, most likely because numerous useful enterprises (say, the construction of a military base) cannot be accomplished any other way. But the “yes” is uneasy, for the reason that underlies the prohibition-commandeering distinction: a loss of transparency and accountability is a given for any intergovernmental bargain. Thus, while the Constitution permits intergovernmental bargains, there is every reason to construe and discipline them in light of the constitutional logic.

Current constitutional doctrine reflects this logic (up to a point). Its point of departure is that intergovernmental bargains are just that—bargains. As the Supreme Court has put it in its foundational Pennhurst decision, conditional funding programs are “in the nature of a contract.” They are not preemption or Supremacy Clause statutes. Their force, such as it is, stems from the states’ acceptance of the contractual obligations: no acceptance, no (preemptive) consequences. The bargains must be freely entered, clearly stated, and in doubtful cases be construed against the party that wrote them (the Congress). The Court has applied this “clear statement” rule in countless cases. Occasional misapplications notwithstanding, the rule is precisely and compellingly right.

Back to the Future

Lo: it’s possible to explicate the basic federalism structure without mentioning “balance” even once. And it’s not a new idea: Printz’s conceptual framework starts with Madison, and it was common currency throughout the nineteenth century (even if, for some curious reason, Justice Scalia refrains from citing the precedents).

The “balance” murk, we owe not to the Constitution but to the New Deal. (The Supreme Court’s first mention of “federalism” in its now-conventional meaning is a 1939 opinion by Justice Felix Frankfurter; “balance” soon followed.) After the New Deal had made the “extent” of Madison’s “federal” powers effectively national (that is, unlimited), its architects decided to compensate for the move by making the “operation” of those powers less-than-national. If the feds get to do stuff they weren’t really meant to do, let’s also have the states do stuff they weren’t meant to do; and let’s throttle back on the feds’ and especially the federal courts’ constitutional authority to stop them (for example, from taxing or regulating other states’ citizens). That way, we get the “balance” we want: more government at every level. Every foundational New Deal case—Erie Railroad, Parker v. Brown, Hines v. Davidowitz—fits this pattern.

When states stroll into court and yelp about the federal “balance,” they aren’t clamoring for more transparency, or accountability, or a re-approximation of Madisonian norms: they are against all those things. They are clamoring for intergovernmental bargains on more advantageous terms for state bureaucracies and their hangers-on. Who cares? The true federalism question is whether one can penetrate Felix Frankfurter’s balance fogbank and re-discover our Constitution. Obamacaid, I’ll argue in a forthcoming post, presents that question in sharp relief.