Tag Archives: WSJ

Crippling the Intelligence We Used to Get bin Laden

Obama’s directive to protect the privacy of foreigners will make Americans less safe.

By Mike Pompeo and David B. Rivkin Jr.

On Jan. 17, in response to former National Security Agency contractor Edward Snowden’s theft of U.S. intelligence secrets and concerns over the NSA’s bulk metadata collection, President Obama issued a Presidential Policy Directive (PPD-28) that neither strengthens American security nor enhances Americans’ privacy. To the contrary, it undermines our intelligence capabilities in service of a novel cause: foreign privacy interests.

All nations collect and analyze foreign communications or signals, what is known as “signals intelligence.” American technological prowess has produced the world’s most abundant stream of signals intelligence, thwarting plots against the U.S. and saving lives. PPD-28 threatens American safety by restricting the use of this signals intelligence.

First, under the new directive, U.S. officials are required to ensure that all searches of foreign signals intelligence are limited to six purposes: countering foreign espionage, terrorism, weapons of mass destruction, cybersecurity, threats to U.S. or allied forces, and transnational crime.

Such policy guidance is appropriate in principle, but these limitations are mere window dressing. Intelligence activities are already heavily scrutinized by executive-branch lawyers to protect Americans’ privacy. Yet the intelligence community must now operate under the presumption that they are somehow engaged in wrongdoing and must justify each and every step by reference to a proper “purpose” to rebut that presumption. This will make intelligence analysts overly cautious and reduce their flexibility in handling security threats.

Second, PPD-28 extends the same privacy protections to foreigners that now apply to data regarding “U.S. persons,” defined as U.S. citizens anywhere in the world and anyone in the U.S. The most visible result will be that intelligence concerning foreigners will contain redactions of material that may have value to U.S. security and diplomacy. The policy contains an exception for information “relevant” to understanding the substantive content of foreign intelligence, but analysts will inevitably face pressure to go with the redaction rather than bring in the lawyers to justify an exception.

These new policies aren’t required by law. Just as foreign terrorists should not be read their Miranda rights, the U.S. Constitution, including the Fourth Amendment’s requirement that searches be reasonable, doesn’t apply to foreigners outside the U.S. And international law imposes no limitations on foreign surveillance. Yet in a stunning display of naïveté, Mr. Obama says it is crucial that people in foreign countries, from Pakistan to Peru, understand that “the United States respects their privacy too.” The leak last week of the recording of a sensitive phone call between two senior State Department officials regarding Ukraine—almost certainly the result of Kremlin surveillance—vividly indicates how other countries feel about protecting Americans’ privacy.

PPD-28 applies only to signals intelligence and has nothing to say about human intelligence from spies, defectors and friendly intelligence services. But this too reveals the senselessness of the new directive. If we could induce an al Qaeda leader to defect, everything in his possession could be used immediately, helping to make connections and capture or kill our enemies. But if we obtained the same information through signals intelligence, much of it would have to be redacted in the name of a privacy “right” not recognized by U.S. or international law.

This disparate treatment of signals and human intelligence will complicate “connecting the dots.” Human and signals intelligence should work together to inform policy makers of a possible threat as quickly and thoroughly as possible. But imposing different restrictions on intelligence data from human and technological sources prevents that from happening. Different data regarding the same threats will be subject to different legal requirements and limitations on use and disclosure. That will require more lawyering and more time, neither of which helps U.S. security.

History provides numerous examples of how vital it is to integrate signals and human intelligence. Their interplay has long been used to direct troop movements, bombing campaigns and drone strikes, and it was crucial to finding Osama bin Laden.

Consider the 1962 Cuban missile crisis. Seeking to upend the strategic nuclear balance, Moscow installed short- and intermediate-range ballistic missiles in Cuba, reasoning that U.S. intelligence wouldn’t detect them until they were operational. American spy planes provided only low-quality photographs (signals intelligence) of the missile sites.

But because Soviet Lt. Col. Oleg Penkovsky, a double agent, had provided British and U.S. intelligence with information about the standard Soviet missile-base layout, analysts were able to interpret the spy-plane data to ascertain what Moscow was doing in Cuba. This kind of synergy between signals data and human intelligence will be stymied by policies that undermine flexibility in the use of intelligence from different sources.

Under the Constitution, national security and intelligence are largely the president’s responsibility. Because President Obama has decided to recognize a foreign right to privacy, Congress has little ability to check his move. But lawmakers can and should shine a bright light on PPD-28 and hold him accountable for a directive that will hobble our foreign-intelligence capabilities, even as the world spies on us and threats to Americans multiply.

Source: http://online.wsj.com/news/articles/SB10001424052702303519404579353322885979550?KEYWORDS=david+rivkin

Mr. Pompeo, a Republican from Kansas, is a member of the House Permanent Select Committee on Intelligence. Mr. Rivkin is a partner at Baker Hostetler LLP and served in the Justice Department and the White House Counsel’s Office during the Reagan and George H.W. Bush administrations.

Advertisements

The President vs. the Senate

Now the Supreme Court will weigh in on Obama’s power play to stock the National Labor Relations Board.

By David B. Rivkin Jr. and Lee A. Casey

Later this month the Supreme Court will hear a case that should resolve how much latitude presidents have to make recess appointments to federal offices that otherwise require Senate confirmation. The boundary of this power has never been decided by the high court. Yet the entire scheme of the U.S. Constitution—which is based on a separation of powers, enforced through checks and balances to safeguard individual liberty—is at stake.

Noel Canning v. NLRB involves several recess appointments President Obama made to the National Labor Relations Board on Jan. 4, 2012. The federal appeals court in Washington, D.C., correctly held that these appointments were unconstitutional both because they filled vacancies when the Senate was not in a true “recess” between Congress’s annual sessions, and because the vacancies had not actually opened up during the purported recess.

Article II, Section 2 of the Constitution states that “The president shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” The federal appellate court’s decision hewed closely to the text and original meaning of this so-called recess appointments clause. Yet the ruling stunned many constitutional lawyers. That’s because the original limitations on the president’s power to make these appointments had long since been effectively discarded.

While this challenge to presidential power touched off considerable controversy, some political observers say that the recess-appointments issue will fade because Senate Democrats recently did away with the traditional filibuster rule, requiring a “super-majority” of at least 60 senators to allow a contentious nomination to proceed to a vote. This rules change, however, does not moot Noel Canning v. NLRB or the issues it raises. Indeed, limiting filibusters will only grease the wheels of a nomination when a Senate majority approves of a particular nominee.

Even when a president’s own party controls the Senate, there are individuals who for one reason or another cannot get the nod. For example, a nominee unacceptable to his or her home-state senator can be subject to a “hold”—a still-respected senatorial courtesy. Recess appointments are not a proper means of avoiding such roadblocks.

The Constitution’s Framers considered and rejected the notion that the president should be able to staff federal offices without congressional oversight. That’s why the president must have Senate “advice and consent” for the most important appointments. As Alexander Hamilton wrote in Federalist 76, the Senate’s participation “would be an excellent check upon a spirit of favoritism in the President, and would tend greatly to prevent the appointment of unfit characters from State prejudice, from family connection, from personal attachment, or from a view to popularity.”

The Framers believed that vesting the entire appointment authority in the president would have made him too powerful, contrary to their key goal of safeguarding individual liberty by dividing power among the three branches of government.

The need for a presidential power to make recess appointments arose from the assumption that Congress would meet infrequently and that there would be long periods—running to many months—when critical federal offices might remain vacant because the Senate was unavailable to discharge its advice and consent function. Recess appointments are a necessary exception to the normal appointments procedures, but they are an exception.

In more recent years, however, as attitudes in Washington have hardened and become more ideological, presidents of both parties have used recess appointments to put individuals in office who the Senate either had already refused to confirm or would likely turn down if given the chance. Such individuals may serve for up to two years. Although presidential frustration may be understandable, since many nominees never even get a Senate vote, overcoming this roadblock is not the constitutional purpose of recess appointments.

To avoid being in recess, Senate Democrats began to hold pro forma sessions in the last years of the George W. Bush administration. These involved tasking, by unanimous consent, one senator from each party to “convene” the Senate for brief periods in order to “receive” presidential nominations. These pro forma sessions are not fundamentally different from the way the Senate routinely conducts its core legislative business, which also can involve passing bills by unanimous consent with few senators in attendance.

Mr. Obama made the appointments that are being challenged in Noel Canning during one of these pro forma Senate sessions. The president determined that for the purpose of considering his nominees, the Senate was not properly in session because, according to White House Counsel Kathryn Ruemmler, the Senate was “unavailable to fulfill its function.” This, of course, raised another critical constitutional question, since the Constitution vests each congressional house with the power to determine how to operate.

Permitting any president to resolve when the Senate is or is not in session upsets the constitutional balance of power among the executive and legislative branches even further. Most dangerously, a president could potentially claim that the Senate was not “in session” when certain legislation was enacted, and then refuse to enforce it on the grounds that it was invalid.

The specific issue of pro forma Senate sessions was not addressed by the lower court. But given the key constitutional prerogatives involved, the Supreme Court asked lawyers representing Senate Republicans to participate in the oral argument. This signals that the court may determine the extent of the president’s recess appointment power and decide whether the Senate’s power to determine its own rules precludes the president from questioning the constitutionality of the pro forma sessions.

The Supreme Court should affirm the court of appeals, limiting recess appointments to filling vacancies actually arising during a true Senate recess, and decisively rejecting the Obama administration’s position that the president can determine when the Senate is or is not in session regardless of the Senate’s own view. This will restore the proper separation of powers between the two political branches that the Framers clearly intended.

Source: http://online.wsj.com/news/articles/SB10001424052702303932504579252072715002560

Messrs. Rivkin and Casey, partners in the Washington, D.C., office of Baker & Hostetler LLP, have filed an amicus brief with the Supreme Court, urging the affirmance of the D.C. Circuit’s decision in Noel Canning.

Why the President’s ObamaCare Maneuver May Backfire

By postponing the employer mandate, Obama has given millions of Americans the legal standing to sue.

By  DAVID B. RIVKIN JR. AND LEE A. CASEY

President Obama’s announcement on July 2 that he is suspending the Affordable Care Act’s employer health-insurance mandate may well have exposed his actions to judicial review—even though that is clearly what he sought to avoid.

The health-care reform law’s employer mandate requires businesses with more than 50 employees to provide a congressionally prescribed set of health-insurance benefits or pay a penalty calculated at about $2,000 per employee. The law was to take effect on Jan. 1, 2014, but Mr. Obama has “postponed” its application until 2015. His aim, the administration said, was to give employers more time to comply with the new rules. But it was also seen as a way to avoid paying at least part of ObamaCare’s mounting political price in the 2014 congressional elections.

Whatever the reason, the president does not have the power to stop the implementation of a law. If there is one bedrock constitutional legal principle, it is that the president must “faithfully execute” federal statutes. He cannot suspend laws he dislikes on policy grounds or because he fears their political consequences.

Mr. Obama, however, has made a habit of exercising an unlawful suspending power, refusing to enforce selected federal laws, including various provisions of the immigration laws against young, undocumented aliens; work requirements enacted as part of the 1996 federal welfare reform law; and the testing accountability provisions of the No Child Left Behind education law.

One key problem with suspension power—aside from the fact that it destroys the balance of power between the two political branches—is that, when skillfully exercised, it sidelines the judiciary. The Constitution requires that a party commencing litigation must have what is commonly called “standing,” i.e., the party must have suffered or will suffer a legal injury that a court can redress. A determined president can head off litigation by effectively rewriting federal statutes in ways that do not create individual injuries so no party has standing.

By suspending the Affordable Care Act’s employer insurance mandate, however, the president has potentially given millions of Americans the necessary standing to challenge his conduct. This is because the Affordable Care Act is a highly integrated law, with many of its key provisions dependent on each other. In addition to the employer mandate, the law also contains an “individual mandate,” requiring most Americans to sign up for a required level of health-insurance coverage or pay a penalty.

The individual mandate was one of the core parts of the Affordable Care Act considered by the Supreme Court in the 2012 case of NFIB v. Sebelius, where the court upheld the statute against constitutional attack. Throughout that litigation, the Obama administration portrayed the individual mandate as an “integral part of a comprehensive scheme of economic regulation” that included the employer insurance mandate, which was intended to give millions of Americans a way of meeting their new obligation to have health insurance. In other words, suspending the employer insurance mandate prevents the individual insurance mandate from working the way Congress intended.

Like the employer mandate, the individual mandate by law will take effect in January 2014 (unless the president postpones that as well). Individuals who will then have to buy their own health insurance will arguably have suffered an injury sufficient to give them standing to sue.

Once in court, these litigants can argue that the very integrated nature of the Affordable Care Act would make it unlawful to apply one part against them, while suspending another section. They can also argue that only Congress can determine whether, once a statute is fundamentally changed post-enactment, it should survive or fall.

This inquiry usually arises when courts, having invalidated on constitutional grounds part of a statute, must determine whether or not Congress would have wanted the valid remaining parts of the law to remain in effect. The relevant constitutional doctrine is called “severability.”

As the Supreme Court noted in the leading severability case, Ayotte v. Planned Parenthood of Northern New England (2006), the ultimate fate of the revised statute is decided based on the “legislative intent.” In the case of the Affordable Care Act, if the courts were, for example, to determine that the employer insurance mandate is unconstitutional, the well-established severability analysis would lead them to conclude that the individual mandate (and likely the entire law) must also fall because Congress did not intend those provisions to operate in the absence of the employer insurance mandate. The president’s suspension of that part of the law, therefore, should also produce the same result, rendering the remainder of the statute unenforceable.

This argument should find favor with judges who are weary of the use of suspension power that improperly aggrandizes presidential authority, diminishes congressional power, and denies the judiciary an opportunity to have its say. Courts would have to conclude that the whole statute must fall while the president’s suspension is in effect. While reaching this conclusion, they might also declare the suspension itself unconstitutional. Both results would mark a significant win for the American people.

Source: http://online.wsj.com/article/SB10001424127887323368704578596360026187772.html?mod=wsj_streaming_stream

An ObamaCare Board Answerable to No One

The ‘death panel’ is a new beast, with god-like powers. Congress should repeal it or test its constitutionality.

By David B. Rivkin Jr. and Elizabeth P. Foley

Signs of ObamaCare’s failings mount daily, including soaring insurance costs, looming provider shortages and inadequate insurance exchanges. Yet the law’s most disturbing feature may be the Independent Payment Advisory Board. The IPAB, sometimes called a “death panel,” threatens both the Medicare program and the Constitution’s separation of powers. At a time when many Americans have been unsettled by abuses at the Internal Revenue Service and Justice Department, the introduction of a powerful and largely unaccountable board into health care merits special scrutiny.

For a vivid illustration of the extent to which life-and-death medical decisions have already been usurped by government bureaucrats, consider the recent refusal by Health and Human Services Secretary Kathleen Sebelius to waive the rules barring access by 10-year old Sarah Murnaghan to the adult lung-transplant list. A judge ultimately intervened and Sarah received a lifesaving transplant June 12. But the grip of the bureaucracy will clamp much harder once the Independent Payment Advisory Board gets going in the next two years.

The board, which will control more than a half-trillion dollars of federal spending annually, is directed to “develop detailed and specific proposals related to the Medicare program,” including proposals cutting Medicare spending below a statutorily prescribed level. In addition, the board is encouraged to make rules “related to” Medicare.

The ObamaCare law also stipulates that there “shall be no administrative or judicial review” of the board’s decisions. Its members will be nearly untouchable, too. They will be presidentially nominated and Senate-confirmed, but after that they can only be fired for “neglect of duty or malfeasance in office.”

Once the board acts, its decisions can be overruled only by Congress, and only through unprecedented and constitutionally dubious legislative procedures—featuring restricted debate, short deadlines for actions by congressional committees and other steps of the process, and supermajoritarian voting requirements. The law allows Congress to kill the otherwise inextirpable board only by a three-fifths supermajority, and only by a vote that takes place in 2017 between Jan. 1 and Aug. 15. If the board fails to implement cuts, all of its powers are to be exercised by HHS Secretary Sebelius or her successor.

The IPAB’s godlike powers are not accidental. Its goal, conspicuously proclaimed by the Obama administration, is to control Medicare spending in ways that are insulated from the political process.

This wholesale transfer of power is at odds with the Constitution’s separation-of-powers architecture that protects individual liberty by preventing an undue aggregation of government power in a single entity. Instead, power is diffused both vertically—with the federal government exercising limited and enumerated powers and the states exercising all remaining authority—and horizontally, with the powers of the federal government divided among the executive, legislative and judicial branches.

This diffusion of power advances another key liberty-enhancing constitutional requirement: accountability. Accountability enables the people to know what government entity is affecting them, so that they can hold officials responsible at the polls. Congress can also hold the executive responsible through oversight and measures like impeachment.

As Chief Justice John Marshall observed in Wayman v. Southard (1825), Congress may delegate tasks to other bodies, but there is a fundamental constitutional difference between letting them “fill up the details” of a statute versus deciding “important subjects,” which “must be entirely regulated by the legislature itself.” Distinguishing between the two, the court said, requires an inquiry into the extent of the power given to the administrative body.

The power given by Congress to the Independent Payment Advisory Board is breathtaking. Congress has willingly abandoned its power to make tough spending decisions (how and where to cut) to an unaccountable board that neither the legislative branch nor the president can control. The law has also entrenched the board’s decisions to an unprecedented degree.

In Mistretta v. United States (1989), the Supreme Court emphasized that, in seeking assistance to fill in details not spelled out in the law, Congress must lay down an “intelligible principle” that “confine[s] the discretion of the authorities to whom Congress has delegated power.” The “intelligible principle” test ensures accountability by demanding that Congress take responsibility for fundamental policy decisions.

The IPAB is guided by no such intelligible principle. ObamaCare mandates that the board impose deep Medicare cuts, while simultaneously forbidding it to ration care. Reducing payments to doctors, hospitals and other health-care providers may cause them to limit or stop accepting Medicare patients, or even to close shop.

These actions will limit seniors’ access to care, causing them to wait longer or forego care—the essence of rationing. ObamaCare’s commands to the board are thus inherently contradictory and, consequently, unintelligible.

Moreover, authorizing the advisory board to make rules “relating to” Medicare gives the board virtually limitless power of the kind hitherto exercised by Congress. For instance, the board could decide to make cuts beyond the statutory target. It could mandate that providers expand benefits without additional payment. It could require that insurers or gynecologists make abortion services available to all their patients as a condition of doing business with Medicare, or that drug companies set aside a certain percentage of Medicare-related revenues to fund “prescription drug affordability.” There is no limit.

If the Independent Payment Advisory Board exercises these vast powers, political accountability will vanish. When constituents angrily protest, Congress, having ceded its core legislative power to another body, will likely just throw up its hands and blame the board.

Since ObamaCare eliminates both judicial review for any of the board’s decisions and public-participation requirements for rule making, this unprecedented insulation of the board guts due process. Even the president’s limited ability to check the board’s power—since he can remove members only for neglect or malfeasance—represents a more circumscribed standard than usual for presidential appointees.

The bottom line is that the Independent Payment Advisory Board isn’t a typical executive agency. It’s a new beast that exercises both executive and legislative power but can’t be controlled by either branch. Seniors and providers hit hardest by the board’s decisions will have nowhere to turn for relief—not Congress, not the president, not the courts.

Attempts to rein in government spending are laudable, but basic decisions about how and where to cut spending properly belong to Congress. In the 225 years of constitutional history, there has been no government entity that violated the separation-of-powers principle like the Independent Payment Advisory Board does.

While the board is profoundly unconstitutional, it is designed to operate in a way that makes it difficult to find private parties with standing to challenge it for at least its first several years in operation. An immediate legal challenge by Congress might be possible, but also faces standing difficulties. Unless and until courts rule on IPAB’s constitutionality, Congress should act quickly to repeal this particular portion of ObamaCare or defund its operations.

Mr. Rivkin, a partner at Baker Hostetler LLP, served in the Justice Department under Presidents Reagan and George H.W. Bush and represented 26 states in challenging ObamaCare. Ms. Foley is a professor of constitutional law at Florida International University and the author of “The Law of Life & Death” (Harvard, 2011).

Source: http://online.wsj.com/article/SB10001424127887324634304578539823614996636.html

Reporters need a federal shield law

News must often be gathered by confidential sources, or not at all. That confidentiality must be uniformly protected.

By David B. Rivkin Jr. and Lee A. Casey

A Colorado judge’s threatened contempt sanctions against Fox News investigative reporter Jana Winter—who refuses to reveal a confidential news source—has refocused public attention on how journalists operate.

News must often be gathered from confidential sources, or not at all. Given how vital is the freedom of the press in a democracy, that confidentiality must be maintained. It is time that Congress recognize this and enact legislation that enables journalists to protect their confidential sources and newsgathering materials.

Ms. Winter covered the July 20, 2012 mass shooting that killed 12 people and injured 58 others in an Aurora, Colo., movie theater. Based on confidential law-enforcement sources, she reported that James E. Holmes, who is charged with the murders, had previously sent a notebook to his psychiatrist describing his intent to kill.

Now that Mr. Holmes is facing trial, his defense attorneys want to know the identities of Ms. Winter’s sources to aid in their client’s defense. The judge has yet to decide whether the notebook, which is potentially covered by a patient-psychiatrist privilege, is admissible. He has postponed until August a decision on whether he will force Ms. Winter to reveal her sources. But if he ultimately sides with the defendant, Ms. Winter will have to choose between violating her sources’ trust and going to jail.

Such pressures on reporters are not uncommon, with prosecutors, defense counsel and judges demanding disclosure of their confidential sources and newsgathering materials. In 2005, for instance, New York Times reporter Judith Miller was jailed for refusing to reveal a confidential source, who leaked to her the identity of CIA employee Valerie Plame, to a grand jury.

Although most states provide some protection for journalists in the form of a reporter’s “privilege,” or “shield law,” the extent of these provisions varies. Fewer than half of the states (including such key media markets as New York, California and Washington, D.C.) have a robust privilege that protects journalists’ confidential sources, with a few narrow exceptions. Other states have recognized only a “qualified” privilege, where consideration is given to how difficult it might be to otherwise obtain the desired information.

David S. Tatel, a highly respected judge of the U.S. Court of Appeals for the D.C. Circuit, suggested in Ms. Miller’s case—where contempt sanctions were upheld because of the gravity of the national security issues involved—that “reason and experience,” as manifested by the laws in “forty-nine states and the District of Columbia,” support “recognition of a privilege for reporters’ confidential source.” Unfortunately, today federal law recognizes only a modest reporter’s privilege, grounded in the rules of evidence and applied by courts on a case-by-case basis, without detailed congressional guidance. Congress can and should do more, defining such a privilege by statute.

A national privilege should include a presumption that journalists may protect the confidentiality of their sources and that this privilege can be overridden only when there would otherwise be an imminent danger to public safety or national security (such as the actual threat of violence or attack). Confidentiality would not be overridden merely because it might jeopardize a prosecution or civil lawsuit.

A national law would not violate the Constitution’s fundamental federalism principles. States are guaranteed wide latitude in addressing their own needs and concerns. But where a national market has developed—as is the case with news and newsgathering—a uniform federal approach to regulation is justifiable.

Federal pre-emption of state law in this area will be a step further than Congress has considered in the past, but Congress has wrestled with this problem before. A bill that would have applied to all federal proceedings, establishing a robust privilege subject to a few exceptions, came close to passage in 2009. It foundered because of the “WikiLeaks” controversy, where a trove of the most sensitive U.S. diplomatic and military documents was released en masse. The bill’s defeat may well have been Julian Assange’s ultimate revenge against the freedom of the press that he disingenuously claimed to venerate.

A reporter’s privilege is not cost-free—sometimes it will impede the ability of the government and private plaintiffs to win in court. However, the cause of justice is not the only worthwhile goal in America’s system of ordered liberty. Civil and criminal prosecutions are already hampered by a set of well-recognized privileges—accorded to psychiatrists, priests, lawyers and spouses—that reflect a societal recognition that they are worth the costs.

Similarly, prosecutors are often unable to introduce important evidence if it was improperly obtained, reflecting the belief that inculcating proper behavior by law-enforcement personnel is worth the costs. A strong federal shield law for reporters would be consistent with how we balance the cause of justice and other key constitutional and societal values.

Given the growing importance of nontraditional media sources, the privilege should apply to professional reporters and citizen-bloggers. It should not, however, be extended to cases where the reporter himself is the target of a criminal investigation unrelated to his receiving of confidential information, such as securities trading on inside information.

Enacting a robust federal shield law for reporters has obvious merits and no partisan impediments. It is thus necessary and doable.

Messrs. Rivkin and Casey served in the U.S. Justice Department during the Reagan and George H.W. Bush administrations. They are partners practicing in the Washington, D.C., office of Baker & Hostetler LLP.

Source: http://online.wsj.com/article/SB10001424127887324030704578424930938783180.html

The opening for a fresh ObamaCare challenge

By defining the mandate as a tax, one that will not be uniformly applied, the Supreme Court ran afoul of the Constitution.

By DAVID B. RIVKIN, JR. AND LEE A. CASEY

ObamaCare is being implemented, having been upheld as constitutional by the Supreme Court in June in a series of cases now known as National Federation of Independent Business v. HHS. It is becoming increasingly clear, however, that the court took a law that was flawed but potentially workable and transformed it into one that is almost certainly unworkable. More important, the justices also may have created new and fatal constitutional problems.

ObamaCare, or the Affordable Care Act, was conceived as a complex statutory scheme designed to provide Americans with near-universal health-care coverage and to effectively federalize the nation’s health-care system. The law’s core provision was an individual health-insurance purchase mandate, adopted by Congress as a “regulation” of interstate commerce. The provision required most Americans to buy federally determined minimum health-care insurance, or to pay a penalty more or less equivalent to the cost of that coverage.

Equally important were provisions requiring creation of state-run health-care insurance exchanges (where middle-income earners could obtain the prescribed coverage) and an expanded Medicaid program (also administered by the states) to cover people with incomes up to 133% (later upped to 138%) of the federal poverty level. An income of up to $31,809 for a family of four would qualify for Medicaid. States that failed to join in the Medicaid expansion were threatened with the loss of all federal Medicaid dollars, nearly a quarter of all state expenditures.

In the ObamaCare ruling, the Supreme Court correctly held that Congress could not impose the individual mandate as a constitutional regulation of interstate commerce and that Congress could not constitutionally use its spending power to coerce the states to expand Medicaid. Rather than strike down the law, however, the court construed the insurance-purchase mandate and its penalty as a “tax” on the failure to have health insurance. The justices also interpreted the Medicaid-expansion requirements as optional—permitting states to opt out of these provisions while staying within the traditional Medicaid program. Given that interpretation, the court’s majority upheld the statute as constitutional.

The court’s determination to preserve ObamaCare through “interpretation” has exacerbated the law’s original flaws to the point that it has become palpably unworkable. By transforming the penalties for failing to comply with the law’s requirements into a “tax,” the court has given the public a green light to ignore ObamaCare’s requirements when it is economically beneficial. Law-abiding individuals, who might otherwise have complied with the law’s expensive purchase mandate to avoid being subjected to financial penalties, can simply now choose to pay a tax and not sign up for coverage. There is certainly no stigma attached to simply paying a tax, and noncompliance with the law’s other requirements—such as those imposed on employers—is arguably made more attractive on the same basis. This effect fundamentally undercuts Congress’s original purpose, which was to expand health-care coverage to the greatest number of people, not to improve federal revenues.

Similarly, having reviewed the likely costs and benefits, states are now taking advantage of the court-granted flexibility. Seven states, including Texas, Mississippi and Georgia, have so far opted out of the Medicaid-expansion provisions, and eight (with more certain to come) are refusing to create the insurance exchanges, leaving this to a federal bureaucracy unequipped to handle these new administrative burdens. As a result, a growing number of low-income Americans will be unable to obtain the free or cost-effective insurance that Congress originally meant them to have, although they remain subject to the mandate-tax.

Policy problems aside, by transforming the mandate into a tax to avoid one set of constitutional problems (Congress having exceeded its constitutionally enumerated powers), the court has created another problem. If the mandate is an indirect tax, as the Supreme Court held, then the Constitution’s “Uniformity Clause” (Article I, Section 8, Clause 1) requires the tax to “be uniform throughout the United States.” The Framers adopted this provision so that a group of dominant states could not shift the federal tax burden to the others. It was yet another constitutional device that was simultaneously designed to protect federalism and safeguard individual liberty.

The Supreme Court has rarely considered the Uniformity Clause’s reach, but it cannot be ignored. The court also refused to impose meaningful limits on Congress’s power to regulate interstate commerce for decades after the 1930s, until justices began to re-establish the constitutional balance in the 1990s with decisions leading up to the ObamaCare ruling this summer. And although the court has upheld as “uniform” taxes that affect states differently in practice, precedent makes clear that a permissible tax must “operate with the same force and effect in every place where the subject of it is found,” as held in the Head Money Cases (1884). The ObamaCare tax arguably does not meet this standard.

ObamaCare provides that low-income taxpayers, who are nevertheless above the federal poverty line, can discharge their mandate-tax obligation by enrolling in the new, expanded Medicaid program, which serves as the functional equivalent of a tax credit. But that program will not now exist in every state because, as a matter of federal law, states can opt out. The actual tax burden will not be geographically uniform as the court’s precedents require.

Thus, having transformed the individual mandate into a tax, the court may face renewed challenges to ObamaCare on uniformity grounds. The justices will then confront a tough choice. Having earlier reinterpreted the mandate as a tax, they would be hard-pressed to approve the geographic disparity created when states opt out of the Medicaid expansion. But that possibility is inherent in a scheme that imposes a nominally uniform tax liability accompanied by the practical equivalent of a fully off-setting tax credit available only to those living in certain states. To uphold such a taxing scheme would eliminate any meaningful uniformity requirement—a result that the Constitution does not permit.

ObamaCare was always a poorly conceived and constitutionally deficient statute. The Supreme Court’s ruling upholding the law has simply made it worse. In the future, that decision is likely to be seen as a prime reason that the federal courts should judge and never legislate—even in the cause of rescuing an otherwise unconstitutional law from oblivion.

Messrs. Rivkin and Casey are lawyers in the Washington, D.C., office of Baker & Hostetler LLP. They pioneered the constitutional arguments against the individual mandate and represented 26 states in challenging ObamaCare before the trial and appellate courts.

A version of this article appeared December 6, 2012, on page A17 in the U.S. edition of The Wall Street Journal, with the headline: The Opening for a Fresh ObamaCare Challenge.

Source: http://online.wsj.com/article/SB10001424127887324705104578151164101375482.html?mod=djemEditorialPage_h

Plenty of debates, not much about states

Democrats regard federalism as quaint, Republicans at least pay lip service to it

By DAVID B. RIVKIN JR. AND ELIZABETH PRICE FOLEY

In the presidential debates, Barack Obama and Mitt Romney ranged across dozens of topics, but an important one didn’t come up: federalism. And no wonder.

The idea that the Constitution grants only limited and enumerated powers and leaves the remainder to the states is foreign to those who believe that the national government should or even could address voters’ every concern. But contrary to the view widely shared by the political class, Washington—in particular, Congress—does not have the power to pass any law it wants in the name of the “general welfare.”

Politicians should take heed. Voters are increasingly focused on the proper role of government in society: Witness the rise of the tea party and unease over the massive debt caused by entitlements and other government handouts. The continuing loud objection to ObamaCare’s takeover of health care shows that voters want to preserve the Constitution’s architecture of limited federal power.

Keeping the federal government within its proper constitutional sphere is critical to all Americans, regardless of their political allegiance. This is because federalism is not about protecting “states’ rights” but about preserving individual liberty. In the words of a unanimous 2011 Supreme Court decision, Bond v. United States, by “denying any one government complete jurisdiction over all the concerns of public life, federalism protects the liberty of the individual from arbitrary power. When government acts in excess of its lawful powers, that liberty is at stake.”

Federalism also allows states to craft policies that best suit the preferences and needs of their citizens, who can always vote with their feet. Likewise, leaving key policy choices to state governments benefits voters through sheer proximity to decision makers. State legislators are often part-timers who work and live in our communities and are more palpably accountable to us.

State-level reform thus comes more swiftly and better reflects the desires of ordinary constituents. States in recent years have led the way in reforming welfare, health care, education and regulatory policies. They have cut deficits, balanced budgets, reformed tax codes and produced jobs.

Federalism also benefits the national government. By having up to 50 different approaches to an issue, Congress can see what works.

Despite federalism’s many virtues, it is not much in vogue. Democrats view it as a quaint, 18th-century relic, another disposable constitutional concept that stands in the way of “progress.” The Obama administration has been particularly disdainful of federalism, with ObamaCare unconstitutionally coercing states into fundamentally revising their Medicaid programs and compelling individuals—under the guise of regulating interstate commerce—to buy a government-approved health-insurance policy.

Republicans pay lip service to federalism but too often toss it aside to achieve their own policy goals. For example, many congressional Republicans, concerned about abusive lawsuits, would nationalize many aspects of medical malpractice, an area of law traditionally reserved to the states.

Meanwhile big-spending states such as California and Illinois have been lobbying Congress for a federal bailout of their unfunded pensions. From the federalist perspective, it is appropriate that the promiscuous spending of some states makes it difficult for them to borrow more money. Such consequences, while dire, provide the political leverage that citizens living within those states need to force their elected representatives to reform.

Yet Washington may well end up rescuing these nearly bankrupt states—because some states will compromise their own sovereignty when the price is right, and the federal government is only too happy to take over and claim political credit. For there is no more assiduous underminer of federalism than the federal government itself. Every session of Congress and every administration adds to the existing voluminous body of federal law that continues to federalize wide swaths of traditional state authority. This must stop.

There was one glimmer of hope for federalism in the third presidential debate, when Mitt Romney talked about saving Medicaid by making block grants to states. “We’ll take that health-care program for the poor and we give it to the states to run because states run these programs more efficiently,” he said. “As a governor, I thought please, give me this program. I can run this more efficiently than the federal government and states, by the way, are proving it.”

If Mr. Romney succeeds in his race for the White House, let’s hope he doesn’t forget that states can be trusted to run their own affairs.

Mr. Rivkin served in the Justice Department under Presidents Reagan and George H.W. Bush and represented 26 states in challenging ObamaCare. He has advised the Romney campaign. Ms. Foley is a law professor at Florida International University College of Law and author of “The Tea Party: Three Principles” (Cambridge, 2011).

Source: http://online.wsj.com/article/SB10000872396390443328404578022821421131956.html