When The Court Said Congress Could Regulate "Inactivity"
Most Democrats are familiar with the story of FDR's battles with the Supreme Court regarding the constitutionality of his New Deal legislation. In 1937, the Court reversed course and recognized the Commerce power as empowering the Congress to enact the New Deal legislation.
In discussing the constitutionality of the individual mandate in the Affordable Care Act, much has been made of the supposed unprecedented nature of the regulation of "inactivity." I have found the argument to be so specious (particularly when one considers the power conferred by the Necessary and Proper Clause), that I have devoted little time to rebutting this argument. But in passing on another subject, I reread NLRB v. Jones & Laughlin Steel, 301 US Reports 1 (1937), the case that began the the "switch in time saves 9" process. A review of the case is instructive. Follow to the other side for the discussion.
Jones & Laughlin Steel decided the constitutionality of the National Labor Relations Act of 1935. Under the NLRA, Jones & Laughlin Steel were charged with unfair labor practices. Jones & Laughlin Steel challenged the constitutionality of the NLRA, arguing it exceeded Congress' Commerce power. The Court rejected the challenge:
We think it clear that the National Labor Relations Act may be construed so as to operate within the sphere of constitutional authority. The jurisdiction conferred upon the Board, and invoked in this instance, is found in section 10(a), 29 U.S.C.A. 160(a), which provides:
'Sec. 10(a). The Board is empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice (listed in section 8 (section 158)) affecting commerce.'[...]:
[...]'affecting commerce' section 2(7), 29 U.S.C.A. 152(7):
'The term 'affecting commerce' means in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce.'This definition is one of exclusion as well as inclusion. [...] It purports to reach only what may be deemed to burden or obstruct that commerce and, thus qualified, it must be construed as contemplating the exercise of control within constitutional bounds. It is a familiar principle that acts which directly burden or obstruct interstate or foreign commerce, or its free flow, are within the reach of the congressional power. [...] It is the effect upon commerce, not the source of the injury, which is the criterion. [...]
[...] Burdens and obstructions may be due to injurious action springing from other sources. The fundamental principle is that the power to regulate commerce is the power to enact 'all appropriate legislation' for its 'protection or advancement' (The Daniel Ball, 10 Wall. 557, 564); to adopt measures 'to promote its growth and insure its safety' (County of Mobile v. Kimball, 102 U.S. 691, 696 , 697 S.); 'to foster, protect, control, and restrain.' (Second Employers' Liability Cases, supra, 223 U.S. 1 , at page 47, 32 S.Ct. 169, 174, 38 L.R.A.(N.S.) 44). See Texas & N.O.R. Co. v. Railway & S.S. Clerks, supra. That power is plenary and may be exerted to protect interstate commerce 'no matter what the source of the dangers which threaten it.' Second Employers' Liability Cases, 223 U.S. 1 , at page 51, 32 S.Ct. 169, 176, 38 L.R.A.( N.S.) 44.
(Emphasis supplied.) Some would argue that the Court is merely declaring that regulation of activity is permitted by the Constitution according to these passage. I would disagree - "no matter what the source" seems fairly conclusive to me. But we need not speculate. For the Court continued:
Experience has abundantly demonstrated that the recognition of the right of employees to self-organization and to have representatives of their own choosing for the purpose of collective bargaining is often an essential condition of industrial peace. Refusal to confer and negotiate has been one of the most prolific causes of strife. [... E]xperience has shown that before the amendment, of 1934, of the Railway Labor Act, 'when there was no dispute as to the organizations authorized to represent the employees, and when there was willingness of the employer to meet such representative for a discussion of their grievances, amicable adjustment of differences had generally followed and strikes had been avoided.
(Emphasis supplied.) "Refusal to negotiate and confer." To wit, inactivity. The NLRA imposed upon covered employers the duty to "negotiate and confer" with the chosen collective bargaining representatives of employees:
The provision of section 9(a)10 that representatives, for the purpose of collective bargaining, of the majority of the employees in an appropriate unit shall be the exclusive representatives of all the employees in that unit, imposes upon the respondent only the duty of conferring and negotiating with the authorized representatives of its employees for the purpose of settling a labor dispute. This provision has its analogue in section 2, Ninth, of the Railway Labor Act, as amended (45 U.S.C.A. 152, subd. 9), which was under consideration in Virginian Railway Co. v. System Federation No. 40, supra. The decree which we affirmed in that case required the railway company to treat with the representative chosen by the employees and also to refrain from entering into collective labor agreements with any one other than their true representative as ascertained in accordance with the provisions of the act. We said that the obligation to treat with the true representative was exclusive and hence imposed the negative duty to treat with no other.
(Emphasis supplied.) Some would argue that the distinction with the individual mandate is that the individual mandate requires "agreement" for the purchase of health insurance. Such an argument would concede that the Commerce power can in fact reach "inactivity," but that it can not require forced "agreement." This is a fallacious argument as to the Commerce power. Indeed, Jones & Laughlin Steel did not raise the argument as a challenge to the Commerce power, but as a violation of its substantive due process right to "liberty of contract." The Jones & Laughlin Steel Court stated:
Fifth. The Means Which the Act Employs.-Questions under the Due Process Clause and Other Constitutional Restrictions.-Respondent asserts its right to conduct its business in an orderly manner without being subjected to arbitrary restraints. [. . .] The act does not compel agreements between employers and employees. It does not compel any agreement whatever.
(Emphasis supplied.) In the ACA case before the Court, there is no substantive due process "liberty of contract" challenge. Nor does the mandate actually require "agreement" to purchase health insurance. ACA imposes a $500 "shared responsibility" penalty on non-exempt persons who do not secure heath insurance.
As Jones & Laughlin Steel demonstrates, the "activity/inactivity" distinction is specious and unprecedented. The hidden argument, one that has long been rejected by the Court, is in fact the Lochner Era Substantive Due Process "liberty of contract" argument.
The Commerce Clause, as consistently interpreted by the Supreme Court, empowers the Congress to enact the individual mandate and penalty. To rule otherwise would be a radical, extreme and extraordinary decision by the current Supreme Court.
Speaking for me only
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