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TEACHING FREEDOM a series of speeches and lectures honoring the virtues of a free and democratic society

The Fight to Bring Down Obamacare and Save the Constitution By Randy E. Barnett

Randy E. Barnett is the Carmack Waterhouse Professor of Legal Theory at the Georgetown University Law Center, where he directs the Georgetown Center for the Constitution and teaches constitutional law and contracts. After graduating from Northwestern University and Harvard Law School, Barnett tried many felony cases as a prosecutor in the Cook County States’ Attorney’s Office in Chicago. In 2011 and 2012 he represented the National Federation of Independent Business in its constitutional challenge to the Affordable Care Act. Barnett has been a visiting professor at Harvard Law School, the University of Pennsylvania, Northwestern and the Universidad Francisco Marroquín in Guatemala. His publications include more than 100 articles and reviews and nine books. Barnett’s opinion pieces appear in such publications as The Wall Street Journal. He frequently appears on news programs on CBS, NBC, PBS, CNN and FOX. In 2007, Barnett was featured in the documentaries, The Trials of Law School and In Search of the Second Amendment. He also portrayed an assistant prosecutor in the 2010 independent film InAlienable.

The following remarks were delivered by Constitutional Scholar Randy E. Barnett to students attending the Legal Studies Institute (LSI) of The Fund for American Studies (TFAS) in the summer of 2012. Barnett is on the LSI Board of Visitors and will serve as a lecturer for the LSI course Originalism and The Federalist Papers this coming summer.

From 2000 until 2012, I have worked on three cases litigated at the Supreme Court. It would seem like I must be one of these law professors who has a consulting practice on the side, or is heavily involved in litigation. Actually, I have only been involved in three cases since I left the prosecutor’s office in Chicago: Oakland Cannabis Buyers Cooperative v. U.S. (OCBC), Gonzales v. Raich, and NFIB v. Sebelius. It just so happens that all three cases went to the Supreme Court of the United States.

consistent with my scholarly interest in the enumerated powers scheme.

I became involved with these cases because of my interest in the Constitution and particular aspects of the Constitution. They were cases that were up my alley, so to speak, given my scholarly expertise. When a trial judge in the OCBC case asked the lawyers to brief the Ninth Amendment, because of my scholarship on that amendment, they came to me to ask me to help them out with their trial brief. Because that case really was a Commerce Clause challenge, rather than a Ninth Amendment challenge, it was

After the Raich case, I truly believed that there would never be another Commerce Clause case, because the decision gave the government such broad powers that the Commerce Clause had essentially become defunct. As a result, my days in the Supreme Court were over. And my work on the Commerce Clause would simply be academic from then on. I did not foresee that Congress would figure out how to do something that they had never done before that goes beyond what the Court had authorized in the Raich case. And by taking

Later two other lawyers and myself brought a lawsuit on behalf of Angel Raich and Diane Monson, which presented a better set of facts for a Commerce Clause challenge to the Controlled Substances Act than OCBC. It was my involvement in OCBC and Raich that really advanced my understanding of the Commerce Clause, the Necessary and Proper Clause, and Supreme Court’s prior cases on the subject.

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2 one than the other. On the Obamacare issue, we lost our ability to take down Obamacare completely, which was our objective. We went after the individual mandate because it was the only provision we could target in order to bring down the whole bill. Standing alone, the mandate is very significant, but it was simply our vehicle, our means, our only means, of bringing down the whole law.

Randy Barnett takes questions from a student after delivering remarks.

this unprecedented step, they gave us an opportunity to challenge the Affordable Care Act. I want to talk today about the case itself. I want you to consider this as a briefing on what the case did and did not accomplish – and it actually accomplished quite a lot. It is something that, as law students and future lawyers, you would really want to know about. There were two reasons why this case was historic, why it received so much attention, why the Supreme Court gave it six hours of oral arguments spread over three days. The norm for Supreme Court cases is one hour of arguments, no matter how big and complicated the issues are. This was the longest time for oral argument in 50 years. The case was so big because it involved not one, but two huge issues pertaining to the liberty of the American people. And the first of those issues is Obamacare. And what that really means is our medical care. It involves our relationship with the government with respect to our most intimate, most private, and most important aspect of our lives, which is our health. The reason why I think Obamacare is vital to the future of American liberty is that I really believe that once the

government owns our doctors, once the government controls our medical care, then we become a servile class – we essentially become subjects of the government, not citizens. Once the government controls your healthcare, it really controls you. Everything becomes political, and we become political beings entirely. We cannot consider ourselves an independent sovereign people once that happens. And I think that is true, by the way, of the people of Western Europe who have adopted this model. I have nothing against Europe and enjoy traveling there. But I do not particularly care for their political culture or their political system. Our ancestors came to this country because they did not like their political culture and their political system. And they founded a different one. By changing the relationship of the individual to the state, Obamacare is a grave threat to that political system, and deliberately so. The second part of the case was equally important. The idea that the federal government is one of limited and enumerated powers is an idea that has been under threat for a very long time. And this case raised this issue to a degree that we have never seen before. So how did we do on these two vital issues? Obviously, we did better on

Although we obviously failed to bring down the whole law, this was always a very long shot. In my prepared speech that I used to give about this case for the first year, I always closed by noting that the Supreme Court bends over backwards in order to uphold acts of Congress. And so, the idea that they were going to bring down the whole law was really always unlikely. The fact that we received four votes to bring down the whole law shows how far our lawsuit got. And our expectations were changed radically by how well oral argument went for us. Before oral argument, everybody was a lot more skeptical about our chances. And after oral argument, everybody, including myself, became a lot more optimistic, though I never predicted we would win. Although the oral argument changed all of our expectations about what we thought was possible, it turns out our original expectations were close to the truth. It was very difficult to get five justices to do this. We got four. We lost the fifth. Yet we did not entirely lose in our effort to bring down Obamacare. First of all, we actually weakened the individual mandate, the requirement that all Americans, who were not exempted, buy health insurance, a requirement that was enforced by what the statute called a penalty. The Supreme Court held that the requirement was unconstitutional; only the penalty can survive as a tax. Reports about the decision claim the mandate

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survives as a tax, but that’s not accurate. Only the penalty survived as a tax. What this means is that no one violates federal law by failing to get insurance. And the people who do not have to pay a penalty because they are exempt from the penalty or their income is too low to qualify do not have to buy insurance. And, if you pay the penalty, you are under no legal requirement to buy insurance. You may simply pay the penalty, and you are in full compliance with federal law. What that means is that people would not feel a moral duty to buy health insurance because their decision to abstain from the market is no longer illegal. Quite a few people would have otherwise felt this pressure – for example, anybody whose legal status depends on compliance with the law, like lawyers, or anyone else who has to attest that they’re not in violation of any laws. Merely paying the penalty places you in compliance with federal law. Converting the “mandate” into an “option,” greatly weakens the funding mechanism at the heart of Obamacare. In truth, the mandate was always a weak funding mechanism because its penalties are so low. Most people assumed that the penalties were initially set very low in order to get the law passed, and then later on, when it turns out a lot of people were not buying health insurance, they would jack the penalties up. Now, the penalties are low, and, according to Chief Justice Roberts’s opinion, have to stay low in order to remain constitutional. In the long run, this could force Congress to revisit the whole scheme. Second, we took down a significant aspect of the Medicaid part of the program, which is, in fact, a radical expansion of Medicaid. Medicaid was originally a program designed to address particular people, like children. It is not a general program of socialized medical

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Once the government controls your healthcare, it really controls you. Everything becomes political, and we become political beings entirely.”

care for the poor, but that is what Obamacare turns it into. Obamacare basically extends socialized medical services for people who are within 133 percent of the poverty line, mandatory on all the states. The states were coerced by the threat to lose all their existing Medicaid funding if they didn’t “agree” to expand the program in this way. In this way, Obamacare puts the foot in the door for a “single payer,” government provided medical system like England or Canada from the bottom up. If single payer is the goal, you just raise the threshold up higher and higher. Once Obamacare is in place, you just need to pass a law that says everybody is in. And then the result is single payer. We never thought we had really a chance to take down the Medicaid program, frankly, because that required dealing with a spending power. Since the New Deal, there has never been a judicial opinion striking down a law for violating the spending power. But it turns out there were seven votes for arguing that Congress had improperly, unconstitutionally coerced the states into accepting this Medicaid expansion. So, we won on that. Although we didn’t take down all of Medicaid or the entire law, we did give individual states the option now of not expanding their system, which they didn’t really have a realistic option of doing before. Had they exercised that option of not expanding their system, up until the lawsuit, they would have lost all their Medicaid funding, including the funding for existing programs, which is something no state can afford to lose. Under this ruling, states will only lose the funding for the new part of the

program, and it means that some states are going to implement the expansion and some states will not. But if every state does not implement it, the government is going to have a problem with the system moving forward. So, we have given Republican governors and Republican state legislatures a very important tool to help bring down Obamacare from the Medicaid side. Having discussed what we gained in our fight against Obamacare, let me now discuss what we gained in our fight to save the Constitution. Going in, everybody thought you have to win on both issues, or you are going to lose on both issues. If we won on the Constitution, we would win on Obamacare, at least on the mandate. If we lost on Obamacare, we figured we would have lost on the Constitution too. To uphold Obamacare, the Court would have to say some really terrible things about what the Constitution means to get to that result. Although we assumed these went together, it turns out they do not. That is what has created this weird outcome; we partially lost on Obamacare, but we almost completely won on the Constitution in a very important way. To appreciate what we won on the Constitution, you have to consider the baseline. And the baseline is: Where did constitutional law stand before this case? This is something that political activists – people in the public – do not always focus on. After the New Deal, law professors and the intelligentsia believed that Congress could essentially do anything it wanted to with respect to the national

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4 economy – and the national economy is basically anything. They essentially believed that the commerce power and all the other powers of Article I had been reinterpreted by the Court to constitute what you might call a “national problems power,” by which Congress had power to address all national problems – and Congress gets to decide what a national problem is and is not. This is what most law professors believed was “settled” by the Supreme Court’s acceptance of the New Deal legislation. Congress now had national problems power. And they specifically had that power with respect to anything involving the economy. The only qualification of the national problems power was the affirmative restrictions on federal power embodied in, for example, the Bill of Rights. These law professors didn’t say there were no limits, but the limits were all in the Bill of Rights, or in some favored “unenumerated” rights, like the right of privacy. With this qualification, they favored an unlimited national problems power, but would never admit it. They always had a way of trying to explain why it was still limited if it really wasn’t. In 1995 in the Lopez case, this confidence that there was a national problems power was slightly shaken when the Supreme Court invalidated the Gun Free School Zone Act. That invalidation was so startling because it went against this baseline that there’s a national problems power in Congress. With the Gun Free School Zone Act, the national problem is violence and guns. Yet, in Lopez, the Court held that it was outside the commerce power of Congress. After Lopez, many law professors went into denial. The Gun Free School Zone Act was enacted with no congressional factual findings. In the future, it was hoped, all Congress had to do was cross its T’s, and dot its I’s, and the Court would back down.

Then came the Morrison case in 2000, which considered the constitutionality of the Violence Against Women Act that was enacted after lots of hearings and lots of findings. Congress did everything that the law professors thought they needed to do to exercise their national problems power and yet the court struck down the statute again. This also struck at the law professors’ conventional wisdom that the baseline of was a national problems power. After Morrison, the lower courts began to get interested the Commerce Clause. In Raich, the Ninth Circuit said that Congress had no power to prohibit you from growing marijuana in your own backyard to consume for medical purposes in a manner that was authorized by state law. When we lost in Raich by a vote of six to three, the legal intelligentsia reverted back to their original position. They said, “A-ha, we were right all along. They’re not serious. What they did in Lopez was only symbolic. What they’re going to do in the future is only symbolic. It only applies to minor legislation.” Moreover, they thought the doctrine of Lopez and Morrison is that Congress cannot reach noneconomic activity, but with respect to anything that is economic, they can still reach it. So, there is still a national problems power, but there may be some small exception for noneconomic activity, which does not often apply. In short, the law professors reverted to their original view, which they never really abandoned. For this reason, when we brought our lawsuit, the legal intelligentsia thought our case was frivolous. One law professor I know went so far as to predict that any lawyer bringing such a challenge would be sanctioned under federal rules for having brought a frivolous case. Now, why did they think our challenge was frivolous? Because it cut against their narrative. After all, Obamacare

5 involved the regulation of an economic activity; both the insurance business and the healthcare system is all economic activity. So this was not about noneconomic activity like Lopez and Morrison. Not only was this the right view, they thought, but it was the view that the Supreme Court itself would adopt – eight to one was the typical prediction.

LSI students listen to Randy Barnett’s remarks.

With this as the baseline, we can now ask what we accomplished in this case. What we accomplished was far more than anyone really had a right to expect: that five justices of the Supreme Court affirmatively endorsed every constitutional argument that we made. Here is what we won: First, Chief Justice Roberts and four justices said that the Commerce Clause is limited. Second, he and four justices said that the courts will police those limits. And third, Chief Justice Roberts and four justices said that the individual mandate exceeded those limits because it was going beyond the Supreme Court doctrine that allowed Congress to regulate economic activity. Here Congress was seeking to regulate inactivity. That is our victory on the Commerce Clause side. Five justices of the Supreme Court repudiated the baseline that 99 percent of all constitutional law

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professors held before the case. They gave us everything we asked for. We never asked the Court to reverse any of the previous New Deal cases. We asked it to draw the line, and say this far and no farther. And that is what it did. The Necessary and Proper Clause was another huge victory for us because this clause was always our biggest weakness. The government made all the right arguments, but they buried their strongest argument among weaker ones. The argument is this: First, Congress is regulating commerce when it regulates the insurance companies. (Though this

The idea that the federal government is one of limited and enumerated powers is an idea that has been under threat for a very long time. And this case raised this issue to a degree that we have never before seen.”

is wrong from an originalist standpoint, a 1944 case called South-Eastern Underwriter said that insurance could be regulated under the Commerce Clause.) Second, Congress has the discretion under McCulloch v. Maryland to pick any means that it wishes in order to regulate interstate commerce so long as it’s not prohibited by the Constitution. Therefore, when Congress chose the insurance mandate as a necessary means of effectuating its regulation of the insurance companies, what is to stop them from doing that? Our only response was that, while these means may be necessary, they’re

not proper. But there was very little authority for distinguishing “necessary” from “proper” or on what “proper” requires. All we had were two cases involving commandeering of state legislatures. But this case didn’t involve state commandeering. Yet we still won on whether the mandate was proper. If you read Justice Roberts’ opinion, you will see he says: “We have been very deferential to Congress’s determination that a regulation is ‘necessary.’ … But we have also carried out our responsibility to declare unconstitutional those laws that undermine the structure of government established by the Constitution. Such laws, which are not consistent with the letter and spirit of the constitution, McCulloch supra, at 421, are not ‘proper [means] for carrying into Execution Congress’s enumerated powers.” So, in this regard too, we won because we made terrific law on the meaning of the Necessary and Proper Clause. This is significant, not because it reverses the New Deal, but because of how it interprets the New Deal. Rather than interpret the New Deal as establishing a national problems power in which “anything goes,” in Lopez and Morrison, Chief Justice Rehnquist interpreted the New Deal as establishing the high water mark of federal power. All the powers claimed during the New Deal and the Great Society are okay. But if Congress wants to go beyond that high water mark, it has a burden of justification. In our challenge to Obamacare we argued: “You have gone beyond that high water mark to regulate inactivity as opposed to activity; therefore it is suspect.” This “high water mark” or “this far and no farther” reading of the New Deal settlement by the Rehnquist Court is different than that of the “anything goes” reading of most law professors. This conflict of visions was at the heart of this case, which is why the Court

allotted so much time to hear argument. We now know that there are five votes on the Roberts Court for the “high water mark” or “this far and no farther” baseline of congressional power. We should also focus on the tax power. That is the bad news on the constitutional side. Yet it was the least bad law we could have made and still lost the case. Roberts obviously wanted to uphold the law, but he did so by slightly expanding the tax power rather than greatly expanding the powers of Congress under the Commerce and Necessary and Proper Clauses. What can Congress do now that it couldn’t do before? It can tax inactivity provided that the tax is low enough not to be coercive. Because the penalty in Obamacare is so low that people can basically opt for the penalty rather than buy health insurance, Roberts said it could be construed as a tax rather than as a mandate. By the way, Congress could previously have taxed inactivity under its power to lay “direct” taxes on the people. But a direct tax must be apportioned equally among the states according to population. So, Roberts’ decision basically eliminates the apportionment requirement from the direct tax power that Congress already has. That is the bad outcome from our challenge. Yet taxes are toxic. There is a reason why, even when Democrats control supermajorities in both Houses, they did not pass this as a tax in the first place. They did not have the votes for it on their side of the aisle. It is an open question whether they would ever have the votes to do this again in the future, but by our challenge we have now made economic mandates toxic too. I don’t think we are in imminent danger of this happening again soon. What does this case say and do about the future? This case has fueled an

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interest in the Constitution by the general public. And it may well have soured conservatives and libertarians on the “judicial restraint” that Chief Justice Roberts claimed to be exercising by his rewriting the statute to uphold it. To some extent, what happened is the legacy of 30 years of a conservative legal movement, and it shows that the movement has not been good enough. What conservatives have asked for has not been the right thing. Conservatives have said they were asking for originalism and judicial restraint. Well here restraint saved Obamacare from the original meaning of the Constitution. Conservatives have to stop asking for judicial restraint and start demanding judicial engagement to compel the other branches to obey

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Although we didn’t take down all of Medicaid or the entire law, we did give individual states the option now of not expanding their system, which they did not really have a realistic option of doing before.” the whole Constitution. I suspect that judicial restraint will not have the same cachet with younger conservatives that it had in the past. For there to be a change in our direction after 70 years of constitutional doctrine favoring the other side, something like this had to happen to trigger that change. And as long as the political process eventually kills Obamacare so we can remain a sovereign people,

which will not be easy, we can turn our attention to restoring our lost Constitution. By weakening Obamacare, we made it less workable and more likely to be revisited. And by making constitutional law better, we are in a position to make it better still. How this ultimately turns out will depend on how the political process unfolds.

Teaching Freedom is a series of remarks published by The Fund for American Studies, a nonprofit educational organization in Washington, D.C. The speakers featured in each issue delivered their remarks at a TFAS institute or conference or serve as faculty members of an institute. The speakers who participate in the educational programs contribute greatly to the purpose and mission of TFAS programs. The speeches are published in an effort to share the words and lessons of the speakers with friends, alumni, supporters and others who are unable to attend the events. To read past issues of Teaching Freedom, visit: www.TFAS.org/TeachingFreedom.

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The Fight to Bring Down Obamacare andSave the Constitution