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All Hail the Commerce Clause

July 1, 2012

Although the Supreme Court upheld the Affordable Care Act, the five conservative justices ruled that the law is not within Congress’s power under the provision in the United States Constitution known as the Commerce Clause.  Republicans are gloating over this victory.  Apparently almost any reduction in federal power is good, from a conservative point of view, no matter how much harm it does.

The very existence of our Constitution owes to the determination of its authors to enhance the power of the national government.  The Articles of Confederation operated as the constitution of the 13 rebellious colonies from 1777 until the Constitution was ratified and became effective in 1789.  The Articles of Confederation gave too little power to the national government and too much to the states, the result being a national consensus within a decade that the Articles were inadequate.

In the 1700s and today, a nation that did not speak internationally with one strong voice could easily be divided and conquered.  Foreign policy and national defense, then and now, require a strong national government.  Successful national defense – and therefore successful foreign policy – requires that the national government have the power to tax, in order that the national defense be reliably funded.  Under the Articles, the national congress had to ask the states for contributions, which were effectively voluntary.  Since a state’s voluntary contribution to the national defense uniquely burdened that state but benefited all 13 equally, states had every motivation to hold back and hope that other states stepped up.

Frustrated by the national government’s inability to fund the fight against the Barbary pirates, Thomas Jefferson complained to James Monroe, “There never will be money in the treasury till the Confederacy shows its teeth. The states must see the rod.”  (The term “confederacy” later took on a different meaning; in the 1780s, it meant the good guys.)  Great Britain refused to honor its obligation under the Treaty of Paris to remove its troops from American territory, and the country lacked the ability to force them out.  British troops remained in American frontier forts until 1795.

Aside from national defense and foreign policy, the single greatest failure of the Articles of Confederation was, and the single most important need for a strong national government is, commerce.  Post-revolutionary American merchants were denied access to New Orleans and the Mississippi River by Spain, and there was nothing the weak national government could do about it.  Congress had the power under the Articles to print money, but without the power to tax the government’s money depreciated drastically, leading General George Washington to complain to John Jay that “a wagon load of money will scarcely purchase a wagon load of provisions.”  Congress asked the states for help, and Jay admonished them fruitlessly that taxation is “the price of liberty, the peace, and the safety of yourselves and posterity.”

In short, the young government had the power to contract for goods and services but no power to pay the contractors; it had the power to enact laws but no power to pay for the enforcement of them.  The Constitutional Convention solved the problem with two powerful constitutional provisions.  One was the Taxing and Spending Clause, which authorizes the national government to collect taxes directly.  The other was the Commerce Clause, which provides that “The Congress shall have Power to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.”

For the first century of its existence, the Commerce Clause served primarily to prevent individual states from promoting their own commercial interests by discriminating against other states’ interests.  But beginning in the 1880s, with an increasingly industrial economy and an increasingly national economy, the Commerce Clause enabled vigorous national economic regulation.  Two early examples are the Interstate Commerce Act in 1887 and the Sherman Antitrust Act in 1890.  The Interstate Commerce Act created the Interstate Commerce Commission and vested it with the authority to regulate railroad shipping.  Its authority was later expanded to cover trucking, interstate bus lines, and telephone companies.  The Sherman Antitrust Act outlawed certain anti-competitive business practices, and it authorized the national government to break up monopolies and cartels.

Addressing the calamity of the Great Depression, Congress enacted the broad program of economic regulation that was the New Deal.  The Supreme Court responded initially by striking down New Deal measures, at one point actually concluding that mining is not “commerce.”  But the court’s resistance to the New Deal was short-lived, and in 1937 the Supreme Court turned 180 degrees and began rejecting challenges to New Deal economic regulations.

Reliance on states to foster a national economy is a design for disaster.  When railroads came to span the continent, followed by high-speed highways and even higher speed telecommunications traffic, national regulation was needed.  The Great Depression was a national problem that required a national response.  Reliance on 48 discordant states would not do.

Today, commerce is international.  The physical distance between the person delivering services and the person buying services is increasingly unimportant.  The call center for a company that provides services in Indiana can be in India, without any loss of technological efficiency.  Any service that can be delivered electronically, by telephone, internet, or e-mail, can be delivered as easily from around the world as from across town.

To compete in an internationally competitive world, we need to step up our national game.  National competitiveness is a national problem.  We have no choice but to look to the national government, not to 50 state governments, for national answers to national problems.  We have no choice but to look to the Commerce Clause.

A few months ago, I noted exactly this argument by a prominent American conservative.  In the aftermath of the Supreme Court’s narrowing of the Commerce Clause, my quotation from his argument is worth repeating:

“In curbing federal excess, courts risk lessening our national economic strength. That strength resides partly in the national aspects of our founding document, among them the now maligned commerce clause and the newly mistrusted supremacy clause, which gives preference to federal over state law when there is a conflict. . . .

“It is tempting to shout states’ rights when deeply flawed federal legislation is enacted, but the momentary satisfactions of that exercise carry long-term constitutional costs. . . .  [I]f courts read the Constitution in such a way that it enables them to make Congress ineffectual, and instead to promote 50 state regulatory regimes in an era of rapidly mounting global challenges, the risks should escape no one. Making our charter more parochial while other nations flex their economic muscle seems like poor timing.”

Conservative justices’ stand against the New Deal lasted not five years.  The opposing logic was too compelling to sustain their resistance:  national economic problems require national solutions.  With our national competitive edge slipping in education, job training, new technologies – and health care – we desperately need national solutions.  Our economy needs high-speed rail to match the Chinese.  Our economy needs broadband to match the South Koreans.  Our economy needs education to match the Finns.

The logic opposing the resistance of today’s conservatives is too compelling to sustain that resistance.  That is why Justice Ginsburg’s eloquent vindication of the Commerce Clause will win the day – because it has to.

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One Comment
  1. scottypv permalink

    This should be required reading in every high school civics class.

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