Archive for June, 2012

SCOTUS and the ACA Ruling, Context and Analysis: Part 1 – the Commerce Clause

So SCOTUS has ruled, Roberts has switched wings and Obamacare has been upheld (for the most part). Hands up all of those who predicted that.

The arguments were heard in March, and the tone taken by many of the Justices, Roberts chief among them, was one of hostility, which was taken by many observers as a bad omen for Obama’s bill. There were four points debated at those arguments. Two of these are irrelevant for today’s ruling; firstly, they decided that it wasn’t too early for the case to be heard (evidently) and secondly, they had discussed whether the individual mandate was separable from the rest of the bill if it was invalidated, which in the event it wasn’t.

The two remaining parts concerned a) the use of the commerce clause to justify the individual mandate to compel individuals to purchase insurance and b) whether the strings attached to Medicaid provision was an onerous burden under the 10th Amendment. In this post, I shall focus on part a).

The interstate commerce clause is the Article I power, under the constitution, for Congress to regulate commerce between states. Given that, under the 10th Amendment, all powers not explicitly reserved for the Federal government are delegated to the states, it has been a historically significant clause in the history of Federal intervention into the economy, and appeared to be the strongest constitutional grounds on which the individual mandate was likely to be upheld. Thus, the blunder by CNN and Fox in declaring that the ACA was unconstitutional because the commerce clause did not apply to it was understandable, even if avoidable/hilarious.

The sources of worry for the the Obama administration were clear enough. The Roberts court had not ruled many cases on the commerce clause, but seemed to be sympathetic to the Rehnquist court’s “partial” revolution in federalism, where use of the commerce clause was being reconsidered. The constitutional context in which the Roberts’ Court operated in was complex. Since United States vs Carolene Products Company (1938), there had been a precedent that regulation of commerce, as Justice Stone wrote, would be presumed constitutional unless it was clearly not. Thus for any federal law that attempted to justify intervention under the constitutional right of the national government to regulate interstate commerce, the burden of proof was shifted so that regulation was unconstitutional only if demonstrably not to do with interstate commerce, rather than presumed unconstitutional unless proven to concern interstate commerce. So we get cases such as Wickard vs Filburn (1942), where quotas for wheat production may be set federally even if none of the wheat is traded across state borders, because of the (marginal) effect that the wheat production will have on the price of wheat nationally.

In this post-New Deal context, the individual mandate would appear to have been quite a clear cut case of federal intervention that was constitutionally justifiable under the commerce clause. Entry or non-entry into a health insurance market has large effects on other consumers in the market. The much mooted “broccoli market” analogy  (that if you compel people to buy health insurance, why not compel them to buy broccoli?) falls short, because the market for broccoli doesn’t impose negative externalities on other broccoli consumers. If an individual chooses not to enter the broccoli market, then there may be a minute price fall, as demand falls. But if relatively healthy individuals don’t buy health insurance, as the average insurance price is (by definition, as an average) above their expected costs of illness, then this drives the price of insurance up for the most needy. Higher premiums mean more people find insurance not worth their while, further driving up premiums if they are the new “relatively healthy” contingent (as is likely) and also leaving more of the populations uninsured. This is an instance, as I’m sure many of you know, of Akerlof’s Market for Lemons. It is not applicable, however, to the market for broccoli.

However, the constitutional interpretation of the commerce clause has shifted since Carolene Products. While the Burger court found in Usery (1976) that the Fair Labour Standards Act injured state sovereignty (more on this in the next post), Garcia vs SAMTA (1984) overturned this. It took the Rehnquist court to seriously challenge the permissive readings of the commerce clause that had become the status quo. In Lopez (1995), Board of Regents (2000), Morrison (2000) and Garrett (2001), the Supreme Court held that regulating firearm possession in schools, age discrimination in employment, violence against women and discrimination against the disabled respectively were not covered by the commerce clause. In the words of Chief Justice Rehnquist, delivering the opinion of the court in Morrison, “gender motivated crimes of violence are not, in any sense of the phrase, economic activity.”

However, Gonzalez vs Raich (2005) held that the regulation of homegrown medical marijuana was constitutional, in line with Wickard vs Filburn. This raises a question of whether a conservative leaning court chooses to invoke the interstate commerce clause to regulate things it doesn’t like (for instance, marijuana) while holding that it cannot regulate things it likes (eg guns) or causes it is unsympathetic to (eg violence against women).

A crudely attitudinalist* approach to the Rehnquist era federalism cases may be misguided however, and is certainly misguided in analysing the ACA ruling. For one thing, Roberts decided that the health market was not regulable under the interstate commerce clause, despite its interstate repercussions, but still held that the law itself was constitutional as a tax (the other four justices on the majority distanced themselves from this restrictive reading of the commerce clause). As Matthew Dickinson has tweeted, it seems unlikely that Roberts was acting attitudinally here, even though his decision is conservative in its interpretation of the commerce clause. What is puzzling is why the Chief Justice subscribed to the tenets of the Rehnquist court, and a more restrictive reading of commerce clause than is afforded by Carolene, when he wanted to uphold the law in general. He certainly set a precedent yesterday that the interstate commerce clause may not be read as liberally as it has been done for the last 70 years, and in constitutional terms if not policy ones, yesterday’s ruling may turn out to be an incredibly significant victory for conservatives. However, in policy terms it was not, and it is unclear why Roberts, if he was prepared to find the individual mandate as not constitutional under the commerce clause, was prepared to uphold it on a relative technicality.

* in brief, attitudinalism states that justices vote according to policy preferences, not precedent, and justify these preferences in legalistic language while being unconstrained by “legal” considerations (Segal and Spaeth, 1993)

The art of coalition building in Greece

Following yesterday’s elections in Greece, New Democracy are the largest party, and, aided by their seat bonus, will seek to form a majority coalition with PASOK this afternoon. However, the BBC are reporting that ND are looking to form a “national coalition”. Assuming this is more than a rhetorical device, we might assume that this will result in an oversized governmental coalition (that is to say, larger than the minimal-winning coalition), with all the problems of coordination and unity associated with it.

To put my comparative government hat on for the moment, there are three main reasons why such coalitions can be attractive. Firstly, they can shield the lead party from being held to ransom by their chief coalition partner. Secondly, it can shift the median of the coalition closer to the lead party’s ideal point. Finally, it can be helpful in times of national crisis.

On the first point, consider a centrist party who nearly has an absolute majority, but needs a small number of MPs, let’s say five, to achieve one. Let’s assume there are four potential partners which could provide these five MPs. If the centrist party enters with just one of them, then it is many ways beholden to them; as kingmakers, the minority party holds the balance of power. However, if the centrist party includes all four, then one party’s defection alone will not bring down the government. Moreover, if the parties are ideologically non-aligned, then coordination on when to defect will be hard.

This justification for Greek national coalition building seems infeasible. To counterbalance PASOK’s influence, the ND will have to turn to Syriza, which is unattractive for reasons I shall come on to. None of the other parties can provide a minimal-winning coalition by themselves. The fourth party, ANEL, would come one seat off, and smaller parties come further from providing it. In combination, they can provide a MWC without PASOK, guarding against defection, but no party alone can strip PASOK of its king-making ability.

This is problematic because a broad coalition, dependent on socialists and communists, may find itself having a ideal policy point within the PASOK, not ND, ideological space. The second justification of oversized coalitions is a balancing one, which is why a coalition between Syriza and the ND isn’t plausible – both can get a coalition with just PASOK, and such a coalition would be nearer their ideal point. Thus the ND, if they are seeking insurance, should look rightwards, to counterbalance PASOK’s influence. This further restricts their ability to form an oversized coalition. If they wish to exclude DIMAR and the KKE, the ND will have to depend on Golden Dawn to secure a MWC (with ANEL) and insurance against PASOK defection.

However, the truth is that none of these scenarios seem plausible for a more fundamental reason. The reduction of issue space to two dimensions is dubious at the best of times, but during a crisis such as this, it is additionally flawed. ANEL and Golden Dawn are as anti-austerity as many of the left-wing parties. Our third reason, that coalitions of national unity are likely in times of national crisis, only applies during genuinely unifying forces, against an external enemy during war, for example. The debate in Greece is polarised, but there are still two poles. Parties such as Syriza, moreover, have potentially great political gains to be made from staying in opposition. Collective action problems are manifold, because even if country stands to gain from political stability, the gains from keeping ones hands clean of being in government are potentially large for each individual party. And thus any sort of coalition building, let alone oversized coalition building, becomes all the harder.

So what do I think is going to happen? I think the ND and PASOK will form a coalition, with few, if any, other coalition partners. The problems and costs associated with oversized coalition building outweigh the benefits, even during this time of crisis. What the country needs is decisiveness, one way or the other, and excluded parties will happily provide dialectical opposition to whatever the government proposes. Moreover, the costs of defection for PASOK, as a party that wants to make the bailout work, are high enough without the ND needing to find other partners in order to hold them to their word.