Federalism Flashcards
Categorical Federalism and the Economics of Federalism
The Framers spelled out a lot of powers within the Constitution, but that doesn’t solve everything. Federal government has been able to expand its bounds under, say, the commerce clause.
Per SGC, the best way to allocate power between states and federal government.
STATE POWER
- Utility maximization - leaving power to the states allows them to conform to their own particular tastes, conditions, preferences. However, where the federal government has retained control (e.g. 2nd Amendment), no room for state to limit further.
- Competition between states - giving states their own power can create healthy competition, thereby raising the overall quality of life of residents.
- States as laboratories - When states are given more power, they can experiment and find dynamic solutions that may spread across the country.
- Lower agency costs - lawmaking at the state level is more efficient, since voters are physically much closer to state politicians, so they can interact with more ease.
FEDERAL POWER
- Economies of scale - it doesn’t make sense for states to duplicate what’s already being done on a national scale–plus, it’s more cost effective to do it all at once.
- Collective action - race to the bottom? States compete to have the most lenient laws so they can attract businesses, etc., which can lead to poor environmental health, etc.
- Negative externalities among states - when states have more power on certain issues, they may generate negative externalities falling primarily on other states (i.e. Illinois poisoning Missouri’s water). Federal power over issue may be only feasible way to stop it.
- Civil rights issues - oppressive factions less likely to arise at a large scale.
SUBSIDIARITY
Social and political issues should be addressed at the lowest level of government that is competent to address them.
Federalist No. 10
An absolutely brilliant essay by Madison that looks at the potential consequences of federalism and hopes that the country’s scale will prevent issues.
POINTS
- There will always be factions; there’s always a risk that the majority will trample the minority.
- The way to counterbalance this is a large commercial republic, rather than a democracy - given its size, a large republic can dissuade factions and filter out temporary passions.
AFTERWARD
- Minority rights ARE sometimes better protected by our national republic, but lobbies, etc., can still dominate (faction-esque).
- Representative democracy DOES filter out temporary passions, but not completely. Think Korematsu.
Bank of the United States
Generally illustrates a broad interpretation of “necessary and proper”
BACKGROUND
- During the country’s early years, it was in debt and a bank seemed like a great way to solve that problem–generate revenue, provide government with secure financing.
- However, people feared corruption and control by moneyed elite.
- NO ENUMERATED POWER to create a federal bank.
- Framers explicitly chose not to include the power to charter corporations in Article I.
PRO-BANK (Hamilton)
*Necessary and Proper, stemming from Taxes, Borrowing Money, Regulation of Trade.
ANTI-BANK
(Madison, ironically)
*No power to incorporate a bank in Constitution.
*Could set a precedent that EVERYTHING is necessary and proper, leaving state with no protections.
*This has nothing to do with taxes, borrowing money, etc.
(Jefferson)
*All powers not specifically delegated go to the states/people.
*Taking a single step beyond the boundaries drawn by Congress is a step into a boundless field of power–BAD NEWS.
FIRST NATIONAL BANK
*Washington signed into effect for 20 years; not renewed.
SECOND NATIONAL BANK
- War of 1812 plunged country into debt; Madison signed it into law in 1816, after which it was chartered for 20 years.
- Several states opposed, as illustrated in McCulloch.
McCulloch v. Maryland (1819)
Authorizes sweeping implied powers for the national government via broad reading of necessary and proper.
FACTS
*2nd National Bank opened a branch in Maryland, after which Maryland promptly imposed a tax targeting it.
HOLDING
- Purposivism - Congress has power under necessary and proper (USEFUL AND CONVENIENT IS ACTUAL MEANING!).
- Textualism - 10th Amendment says “all power not delegated,” not “all power not expressly delegated.” This leaves some wiggle room. Plus, under supremacy clause, bank was created by federal statute and cannot be inhibited by state law - no tax!
- Past practice - Bank had been around for 20 years; even Madison acknowledged that it was settled law.
- Structuralism - sovereignty rests in people, not states.
- Policy - the power to tax is the power to destroy.
IMPLIED POWER TEST
- Let the end be legitimate
- Let the end be within the scope of the Constitution
- All means which which are plainly adapted to that end and consistent with the letter/spirit of the law are constitutional.
Andrew Jackson’s Veto Message on the Bank
Jackson vetoed the creation of the 3d National Bank.
POINTS
- Convenient and useful, but it’s unauthorized by Constitution and subversive to state rights.
- Precedent isn’t everything.
- Bank is unfair monopoly.
AFTERWARD
*No Federal Bank-like institution would appear again until the Federal Reserve Act in 1912.
Commerce Clause
Article I, sct. 8, cl. 3 - HUGE source of debate about the outer bounds of federal power.
Per Rehnquist in Lopez, Congress can regulate…
CHANNELS OF INTERSTATE COMMERCE
*Darby - labor conditions
*Heart of Atlanta - civil rights and public accommodations
INSTRUMENTALITIES OF INTERSTATE COMMERCE
*Shreveport Rate - instrumentalities
*Perez - loan sharking
ACTIVITIES HAVING SUBSTANTIAL RELATION TO INTERSTATE COMMERCE
*Laughlin Steel - labor law
*Wickard - aggregation
It was originally understood rather narrowly, but during the 1937 “revolution,” the Court started a precedent that was incredibly lenient toward interpretation. That changed, to some extent, in 1995, when Congress established Lopez, soon to be followed by Morrison.
Necessary and Proper Clause
Article I, sct. 8 - ANOTHER source of debate about outer bounds of federal power.
ISSUES
What does necessary and proper mean? McCulloch defined as convenient and useful, but is that true? Your answer determines how much leeway the government has in assuming new powers.
MCCULLOCH TEST
If the end is legitimate and within the scope of the constitution, it’s legitimate if it’s consistent with the letter and spirit.
EXAMPLES
McCulloch, of course
Wickard - is regulation of consumption and production okay?
NFIB v. Sebelius - seems to rein in meaning…said that the individual mandate wasn’t necessary/proper to any of Congress’s necessary functions.
Gibbons v. Ogden (1824)
The first big interstate commerce case–read the clause broadly to include regulation of navigation, since ships are instrumentalities of commerce.
FACTS
*Ogden received NY license purporting to give him exclusive steamboat operations, but Gibbons maintained the same under a federal license.
HOLDING
- If state and Congress both try to regulate interstate commerce, federal triumphs under commerce and supremacy clauses.
- Congress can regulate navigation in all navigable bodies of water (implies for recreational use, too!)
- Commerce is moving people and ideas across state lines, not just buying and selling.
OPEN QUESTIONS
- Constitutional phrasing implies that intrastate commerce is left out, though SCOTUS has found the opposite.
- What does “regulate” mean? Can you PROHIBIT, as with buying/selling drugs?
SGC NOTE
*Congress sets FLOOR - if states inhibit that floor, they’re preempted, but if they build up, it’s allowed. Think Rhode Island’s higher minimum wage.
United States v. Darby (1941)
Regulation of commerce can go INTRAstate if it affects INTERstate, at which point Congress can choose the means to regulate it.
FACTS
*Congress passed FLSA to prevent introduction and shipment of goods produced under poor labor conditions
HOLDING
- While manufacturing isn’t, in and of itself, interstate commerce, the shipment of manufactured goods interstate IS such commerce; prohibition of substandardly produced goods is regulation.
- Overturns Hammer, which held that work conditions couldn’t be regulated.
SGC: EVERYTHING affects interstate commerce - where to draw the line? A kid’s lemonade store impacts.
Wickard v. Filburn (1942)
HUGE DEAL. SCOTUS finds that the Commerce Clause can reach purely in-state, non-commercial activities.
FACTS
- New Deal leads to regulation of wheat farmers’ production in order to stabilize national prices.
- Filburn was penalized for growing in excess, though he was planning on using it to feed his livestock and family.
HOLDING
- Congress may regulate local activity if it exerts substantial economic effect on interstate commerce.
- Subject of regulation/direct or indirect line/immaterial.
- Aggregation
AGGREGATION - combine all hypothetical instances of an activity and asks, in aggregate, if that activity would impose a substantial effect on interstate commerce.
SGC THOUGHTS
*Power to regulate home activity is generally not in the reach of the commerce power of the federal government–overextension of Necessary and Proper.
Heart of Atlanta Motel v. United States (1964)
Civil Rights Act of ‘64 upheld under Commerce Clause.
BACKGROUND
- 1964 - Congress passes CRA, forbidding racial discrimination in places of public accommodation.
- Heart of Atlanta Motel refused to rent rooms to African Americans.
CLARK’S MAJORITY
*Congress has power to remove local obstructions to interstate commerce.
TEST
- Is activity to be regulated commerce which concerns more than one state?
- If yes, does it have a real and substantial relationship to national interest?
* Did Congress have rational basis?
* If yes, are the means selected to eliminate that evil reasonable and appropriate?
SGC NOTE
This is the most important piece of legislation…ever?
BUT
How do you distinguish this from VAWA in Morrison?
United States v. Lopez (1995)
Court attempts to set outer bound on Commerce for the first time since 1937.
BACKGROUND
- GFSZA makes it illegal to carry a firearm on school grounds.
- Lopez, a senior in HS, charged.
REHNQUIST’S HOLDING
- This activity has no clear impact on economy overall.
- Congress can only regulate channels, instrumentalities, and activities of interstate commerce–carrying, not even buying/selling, doesn’t clearly affect commerce.
KENNEDY’S CONCURRENCE
*Balance of power issue–education is a concern of the states, who should be able to use their own judgment and experiment. SGC AGREES.
THOMAS CONCURRENCE
- Substantial effects test is problematic because it demotes basically all of Article 1, sct. 8 to surplusage.
- Commerce was limited back in the day - only buying, selling, MAYBE transporting goods.
- Reverse Gibbons!
SOUTER DISSENT
*Congressional decisions should be analyzed under rational basis–majority’s decision doesn’t properly defer.
BREYER DISSENT
*Consider aggregate impact–violent crimes in schools affect quality of education affects economy.
SGC NOTE: This is much harder than growing pot in your kitchen or growing wheat on your farm. Thomas is powerful, but he ignores some intentional redundancies in Constitution.
Taxing Clause
Article I, sct. 2 discusses apportionment of direct taxes.
Article I, sct. 8 enumerates the taxing power.
Article I, sct. 9 limits the taxing power to proportionality.
DIRECT TAX
Never defined–SGC thinks it’s a tax assessed immediately on a person for existing or for real estate.
INDIRECT TAX
Taxes on items - tariff, sales, VAT, etc.
SIXTEENTH AMENDMENT
Allowed Congress to adopt income and inheritance taxes.
MCCULLOCH - power to tax is the power to destroy.
BANS AND LIMITS
- No power on export taxes
- Duties, imposts, excises must be uniform
- Direct taxes must be apportioned on basis of population.
Hylton v. United States (1796)
Indirect taxes do not need to be apportioned.
FACTS
*Carriage tax passed that was not apportioned among states.
CHASE’S HOLDING
- Where apportionment would lead to absurd or unjust results, it’s not a direct tax.
- Direct taxes usually land or capitulation.
PATTERON’S CONCURRENCE
*Consumption may be taxed - not indirect.
SGC - economists prefer consumption to income, since it incentivizes saving.
SGC NOTES:
- Tax on owning carriages is direct; tax on purchasing is indirect.
- Warren want a wealth tax, where people pay 2% of wealth to government each year–billionaires have so much property, but their capital gains taxed at 20%. Can tax luxury goods, but hard to argue for a wealth tax.
- Moral taxes on cigarettes and alcohol are okay, illustrating taxes’ regulatory/moral backing.
- Taxes penalizing certain business practices are penalties, not taxes.
Spending Power
Article 1, sct. 8 says that Congress can pay debts and provide for the general welfare/common defense of the US.
Does Necessary and Proper expand?
Article IV, sct. 3 says that Congress can dispose of and make all needful rules and regulations respecting US property.
PRO-SPENDING (Hamilton)
- Tax and provide for general welfare allow spending
- SCOTUS adopts this mentality in 1930s.
- Think of all the situations that could happen where we’d be defenseless without spending power!
ANTI-SPENDING (Madison)
*Federal money may only be spent in pursuance of enumerated powers.
CONTROVERSIES (both Madisonian)
- Assumption - government assumes state revolutionary war debt? NO.
- Savannah Fire - help out Savannah after fire? NO.
THE SWITCH
US v. Butler (1936)
