Government by Commerce Clause

William J. Watkins, Jr. Independent Institute
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Are there any limits to the federal government’s power to regulate commerce? U.S. District Judge Henry Hudson has promised a decision on this issue before the end of this year. Judge Hudson is presiding over the Commonwealth of Virginia’s challenge to the Patient Protection and Affordable Care Act (better known as Obamacare), which forces Americans to buy health insurance or pay a fine.

Congress claimed authority to pass this legislation under the Constitution’s Commerce Clause. Pursuant to this enumerated power, Congress may “regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” When the Constitution was drafted, commerce was understood, as explained in Samuel Johnson’s Dictionary of the English Language (3d ed. 1765), as “intercourse, exchange of one thing for another, interchange of anything; trade; traffick.”

The purpose of the Commerce Clause was to establish a free-trade zone within the United States by removing internal trade barriers — to promote the unhindered traffic and exchange of manufactured items and foodstuffs.

Prior to the Constitution, some states taxed goods that were simply passing through on their way to another state. Such taxes raised the price of goods and discouraged trade. By granting Congress a commerce power, the framers sought to destroy these internal trade barriers. In the words of Alexander Hamilton, an “unrestrained intercourse between the States themselves will advance the trade of each by an interchange of their respective productions.”

So what does mandating the purchase of health insurance have to do with items freely traveling across states lines? Nothing. Then how can Congress claim that the law establishing Obamacare is a regulation of interstate commerce?

Unfortunately, over the past 70 years, the Commerce Clause has been stretched beyond recognition. For example, in 1938 Congress passed and President Franklin D. Roosevelt signed the Agriculture Adjustment Act. Under this statute, the federal government sought to prop up wheat prices by limiting the amount of wheat grown in the United States. An Ohio farmer, Roscoe Filburn, in a case known as Wickard v. Filburn, challenged the law as exceeding Congress’ power to regulate interstate commerce. Filburn argued that his wheat was intended solely for use on his farm, to feed his chickens, and thus the statute should not apply to him.

In 1942, the Supreme Court ruled against Filburn, however. A local activity, the Court explained, can “be reached by Congress if it exerts a substantial economic effect on interstate commerce.” Although the 11.9 acres of wheat in question did not seem to affect interstate commerce, the Court reasoned that Filburn’s wheat, “taken together with that of many others similarly situated, is far from trivial.” Because growing wheat for home consumption by hundreds of farmers could influence the demand and price of wheat, the Court reasoned, the activities of one Ohio farmer could be reached by Congress’ power to regulate commerce.

Since upholding the Agricultural Adjustment Act, the Court has redefined interstate commerce as “economic activity.” If an activity substantially affects (or potentially could affect) the national market, then Congress may regulate the activity via the Commerce Clause. Because almost any activity conceivably could have some effect on the economy, Congress has used the Commerce Clause to pass laws dealing with everything from crime to civil rights.

But even under the outer limits of the modern understanding of the Commerce Clause, Congress is regulating some sort of activity. In the matter of Obamacare, however, Congress is seeking to regulate inactivity or passivity: an individual’s decision not to purchase a health insurance policy. Never before in American history has the federal government required United States citizens to purchase a good or service. Even in the difficult days of World War II, Congress never decreed that Americans had to purchase war bonds.

If Congress and the president can force Americans to buy health insurance, is any activity beyond the scope of the Commerce Clause? If the auto industry needs assistance, what is to stop Congress from requiring that all multi-car families to own at least one Chrysler or General Motors product? Rather than bail out the banks, Congress could simply require citizens to increase their bank deposits or face a penalty. The possibilities are endless.

Modern federal power looks nothing like the system of “few and defined” powers described by James Madison in Federalist No. 45. Nonetheless, the Patient Protection and Affordable Care Act is a very new creature. By claiming the power to force citizens to purchase health insurance, President Obama and Congress seek to remove the remaining boundaries on federal power.

In 1942, the courts aided and abetted FDR’s expansion of the commerce power by upholding the Agricultural Adjustment Act. Let’s hope that Judge Hudson, unlike his predecessors, shows the courage to oppose the unlimited power claimed by our current leaders.

William J. Watkins, Jr. is a Research Fellow at The Independent Institute, Oakland, Calif. (www.independent.org), author of “Reclaiming the American Revolution” (Palgrave Macmillan), and a former law clerk to Judge William B. Traxler, Jr. of the U. S. Court of Appeals for the Fourth Circuit.