Monthly Archives: March 2010

Quote Of The Day

Those of us who predicted lenders would avoid US Treasuries during the financial meltdown we initially somewhat surprised to see investors flocking to them. It’s the result of a supposed “flight to quality”, and nothing at the time seemed less risky than buying US Treasury bonds, since the Treasury sells its bonds in a currency it can print.

Well, that has changed, as represented by yields:

The bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama.

When it’s “safer” to lend to a corporate businessman who can’t print his own currency or extort his subjects citizens for more tax dollars, you know something serious is going down.

Berkshire Hathaway, P&G, Johnson & Johnson, and Lowe’s are all trading below similar maturity US T-bills, a situation the linked article calls “exceedingly rare”.

But don’t worry, mere citizen. I’m sure Obama’s working on an individual mandate to get you to “do your part” and invest in Treasury bonds.

Hat Tip: QandO

UPDATE: Looks like yields are continuing to rise.

Comment Of The Day

Walter, commenting on Doug’s post about legal challenges to the health care bill:

The outcome is not as important, one might reason, as it is to exhaust this means of redress by law. It needs to be clear to the people that law has failed so that political redress will be urgently sought. That failing… is not a thing we should wish to see.

The problem with revolution is not the undertaking — it is making the people see that their government is illegitimate and harmful to their interests. Once you’ve accomplished that, the heavy lifting is done.

The Cost Of Repeal

So, the CBO says this bill lowers the deficit. And thus, says Ezra Klein, it’ll be tougher for the Republicans to repeal, should they win control of Congress:

And as a reader reminds me, people should also remember that “now that the reform bill is the law of the land, [repeal] would increase the budget deficit relative to current law, at least in the eyes of the CBO.” So if they weren’t going to find offsets, they’d also need to overrule pay-go.

Cue AHA! moment:

If spending needs to be accounted for within pay-go, then the doc-fix will require $200B of offsetting cuts!

…until I found out that the doc-fix was exempted from PAYGO rules.

Presumably if the Republicans regained control of Congress, they could similarly exempt certain things from PAYGO accounting.

But let’s just assume for a moment that they didn’t want to cut such — I’ve found an answer!

Based on the results of this study (h/t Megan McArdle), maybe they can just find offsetting cuts in our stupid policy of subsidizing corn and taxing sugar.

Nah, never mind, the Republicans know that won’t play in Iowa.

Thirteen States File Suit Against ObamaCare

Well, that didn’t take long:

TALLAHASSEE, Fla. — Attorneys general from 13 states sued the federal government Tuesday, claiming the landmark health care overhaul bill is unconstitutional just seven minutes after President Barack Obama signed it into law.

The lawsuit was filed in Pensacola after the Democratic president signed the bill the House passed Sunday night.

“The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying health care coverage,” the lawsuit says.

Legal experts say it has little chance of succeeding because, under the Constitution, federal laws trump state laws.

Florida Attorney General Bill McCollum is taking the lead and is joined by attorneys general from South Carolina, Nebraska, Texas, Michigan, Utah, Pennsylvania, Alabama, South Dakota, Idaho, Washington, Colorado and Louisiana. All are Republicans except James “Buddy” Caldwell of Louisiana, who is a Democrat.

Some states are considering separate lawsuits and still others may join the multistate suit.

I assume we will hear that Ken Cuccinelli has filed suit in the Eastern District of Virginia before the day is out.

As I’ve said, I am not optimistic about the ultimate outcome in these cases, but it will be interesting to watch them proceed through the system.

Here is the pleading itself:

Attorneys General suit on health care

Update: Make that fourteen states, Ken Cuccinelli has filed suit on behalf of the Commonwealth of Virginia.

Will The Courts Strike Down ObamaCare ? Don’t Count On It

Over at The American Spectator, conservative lawyer Stacy Cline points out that the legal challenges to ObamaCare have the odds, and the case law, against them:

Last night’s passage of the greatest expansion of the federal government since the Great Society is a sad day for our country, not only because it may bankrupt our future, but also because we have no recourse to the Constitution. Our Constitution was elegantly designed to protect individuals from too much concentration of power in any one source, but the Supreme Court has evolved into a body that has protected and even facilitated the modern regulatory state at the expense of our founding principles. The optimism of state attorneys general and others who hope to challenge the constitutionality of this legislation is admirable, but such challenges are not likely to be successful.

But what, you might ask, about what seems like it might be the most vulnerable part of the health care bill, the individual mandates ?

Well, as Cline points out, that may actually be the weakest ground of all:

Despite this patent overreach by Congress, the Supreme Court’s flawed jurisprudence on this issue probably permits it. The government will argue that it has the authority to impose the individual mandate under the Commerce Clause of the Constitution, which permits Congress “to regulate Commerce … among the several States.” Supreme Court precedent has interpreted the Commerce Clause to permit Congress to regulate and prohibit all sorts of economic activities that in the aggregate substantially affect interstate commerce.

In the 1942 case Wickard v. Filburn, the Supreme Court authorized the broadest federal power to date, concluding that a farmer growing wheat for his own use was not exempt from federal caps on wheat production that had been established by the government to artificially drive up the price of wheat. The fact that the farmer was growing wheat for his own use meant he would not purchase it on the open market. The Court held that his failure to purchase wheat in the market, taken in the aggregate, would have a substantial effect on interstate commerce. Thus, the Court laid the groundwork for Congress to regulate nearly any activity with a weak connection to economic activity, and for years Congress did not even bother to establish the basis for its Commerce Clause authority.

The Supreme Court had the opportunity to overturn this precedent in Raich v. Gonzales, the 2005 medical marijuana case, but balked. In that case, the Court decided that it was within Congress’s Commerce Clause power to prohibit individuals from growing medicinal marijuana for their personal use. In reaching this conclusion, the Court affirmed that activity that does not fall under the Commerce Clause alone can be reached as part of a broader scheme to regulate interstate commerce. This case was blow to those of us who thought the opinions in Lopez and Morrison signaled that the Court was willing to scale federal power back to something closer to the Constitution’s original intent.

The individual mandate can be distinguished from these cases, as it compels economic activity where Wickard and Raich did not. But what Raich showed is that the Supreme Court does not have the will to limit federal power when Congress has made the most modest of showings that the activity has economic effects. The individual mandate is likely to be upheld as part of a legislative scheme that regulates economic activity, and the insult to our constitutional government, designed to limit the federal government to enumerated powers, will have received judicial sanction.

Moreover, as Cline goes on to point out, the Court may not even need to reach the Commerce Clause issue. The Solicitor General, who will be arguing the case in favor of upholding the law, will clearly argue that the mandate and it’s penalty provision are, in reality, a tax, which would be governed under the General Welfare Clause. If that’s the case, then the challenge is pretty much doomed:

The last time a penalty was deemed an unconstituional tax by the Supreme Court was 1922, and since then the Court has permitted taxes on gambling, tobacco, alcohol and a number of other disfavored activities. Should the Commerce Clause prove to be an indefensible basis of authority, the General Welfare Clause would likely be another source of authority. The current Supreme Court, which time and again demonstrates its willingness to uphold the modern regulatory state to legal challenge, is unlikely to delve into a nearly century old line of cases limiting Congress’s ability to impose penalties as taxes.

If they’re not going to over-rule a clearly wrong 68 year old case, they sure aren’t going to overrule one that’s more than a century old.

Over at The Volokh Conspiracy, Orin Kerr gives odds on how likely a SCOTUS ruling against ObamaCare actually is:

With all this blogging here at the VC about whether the courts will invalidate the individual mandate as exceeding Congress’s Article I authority, I thought I would add my two cents by estimating the odds of that happening. In my view, there is a less than 1% chance that courts will invalidate the individual mandate as exceeding Congress’s Article I power. I tend to doubt the issue will get to the Supreme Court: The circuits will be splitless, I expect, and the Supreme Court will decline to hear the case. In the unlikely event a split arises and the Court does take it, I would expect a 9–0 (or possibly 8–1) vote to uphold the individual mandate.

Blogging about such issues tends to bring out some unhappy responses, so let me be clear about a few things: (a) I don’t like the individual mandate, (b) if I were a legislator, I wouldn’t have voted for it, (c) I don’t like modern commerce clause doctrine, (d) if I were magically made a Supreme Court Justice in the mid 20th century, I wouldn’t have supported the expansion of the commerce clause so that it covers, well, pretty much everything, (e) I agree that the individual mandate exceeds an originalist understanding of the Commerce Clause, and (f) I agree that legislators and the public are free to interpret the Constitution differently than the courts and to vote against (or ask their legislator to vote against) the legislation on that basis.

But with all of these caveats, I’ll stand by my prediction.

I agree with Kerr.

That doesn’t mean that the law shouldn’t be challenged in Court. It should. These arguments need to be made and, even if the challenges are ultimately unsuccessful, they will bring to the forefront issues about the size and scope of government, and the extent to which the limitations of the Constitution have been exceeded that maybe, just maybe, the American people will wake up.

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