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Last week,
responding to President Obama's latest populist assault on the wealthy, I
issued a commentary
in which I explained why his ideas about American economic history were
fundamentally flawed. As dangerous and erroneous as those views are, at least
I can cut the President some slack for commenting on a subject in which he
really has no basis for expertise. Hailing from academia and local community
organizing, Barack Obama likely did not spend huge amounts of time boning up
on economic history. However, there are other subjects where he should find
firmer footing. Constitutional law certainly comes to mind. After all, Obama
rose to national prominence based on his status as a legal scholar. He
graduated magna cum laude from Harvard Law School, where he was
elected president of the prestigious Harvard Law Review. He went on to teach
constitutional law at the University of Chicago Law School, one of the top
ranked schools in the country.
Based on
these achievements, it is simply stunning that he made so many fundamental
errors last week in his analysis of the Supreme Court's review of his
sweeping health care legislation. Not only did he make grossly inaccurate
statements with regards to the health care legislation, and the history of
Supreme Court decisions that relate to it, but he also showed little
understanding of the very purpose that the Court serves within the
constitutional framework of the U.S. government. These remarks either
indicate that a Harvard degree isn't worth the paper it's written on or that
there is nothing Obama won't say to advance his political agenda.
In his
apparently off-the-cuff remarks he stated that "I'm confident that the
Supreme Court will not take what will be an unprecedented, extraordinary step
of overturning a law that was passed by a strong majority of a democratically
elected Congress." Before even turning to the more nuanced parts of that
statement, I would ask the President what he considers to be a "strong
majority?" His health care legislation (dubbed "Obamacare"
by Republicans), passed the House of Representatives
in March 2010 on a nearly party line vote of 220-221 (some would call this
result "a squeaker.") What's more, just six months later, the slim
majority that voted to pass the legislation was voted out of existence. Not
only would the law stand no chance of passage in the current Congress, the
majority of Americans still show misgivings about the expansion of federal
power that the law involves. So much for a groundswell of national support.
But that's just the appetizer.
Obama claimed
that it would be "unprecedented" for the Supreme Court to overturn
a law passed by Congress. Is he kidding? Every seventh or eighth grader who
has taken a civics course knows that the Supreme Court acts as a check on the
executive and legislative branches of government (who can often disregard the
Constitution in their quests for votes and power). The intent of the framers
of the constitution was affirmed in 1803 by the landmark case "Marbury
v. Madison" in which Chief Justice John Marshall established the
doctrine of "judicial review," whereby the Court can strike down
any law that it feels to be unconstitutional. Is it possible that they never
got around to that case at Harvard?
Since Marbury
the Supreme Court has undone sweeping economic policies many times. Perhaps
the most significant example was in 1895 when the Income Tax Act of 1894 was
undone by Pollock v. Farmers Loan and Trust. By ruling that the new
income tax did not conform to the taxing powers delegated in the
Constitution, the Supreme Court derailed the revenue seeking agenda of the
federal government. Proponents of the tax had to revert to the constitutional
amendment process, a workaround that took 18 years and ultimately resulted in
the 16th Amendment.
Forty years
after Pollock the Supreme Court struck again when it invalidated the
National Recovery Act (NRA), Franklin Roosevelt's signature piece of
Depression Era legislation. The NRA was truly an "unprecedented"
intrusion into the commercial lives of Americans which injected U.S. government
micromanagement into almost every facet of commercial activity. It told
merchants and industries how much they could charge for particular products,
how much they should pay workers, how long workers could work, how employers
could negotiate with unions, and established "codes of fair
competition" for all business to follow.
In a
unanimous decision in the 1935 Schechter Poultry Corp v. United States,
the Supreme Court threw out the NRA. The Court ruled that the Act's draconian
economic engineering was too broad an interpretation of the Constitution's
infamous "commerce clause." After the ruling, Justice Louis Brendeis (not known for his strict adherence to
conservative constitutional interpretation) famously remarked to a
presidential aide, "This is the end of this business of centralization,
and I want you to go back and tell the President that we're not going to let
this government centralize everything." Wow, President Obama, now that's
a whole lot of precedent.
What is
perhaps even more shocking than Obama's ignorance on these subjects is the
media's reluctance to really hold his feet to the fire. Imagine if Sarah
Palin had made similarly ignorant statements during the presidential campaign
of 2008. She would have been absolutely crucified in the press for her lack
of understanding of the basics of federal checks and balances. But Sarah
Palin would have had an excuse, she was a sports
reporter, turned small town mayor, turned one-term governor of Alaska. She
never taught a class in constitutional law at an elite law school.
Although
subsequent statements by the President and his spokespeople have attempted to
"clarify" (and soften) his originally indefensible remarks, the
impression he made will be hard to erase. My hope is that his attempt to
intimidate the court into upholding his law will backfire, and what is left
of judicial independence will save us from Obama's impractical health care
plan. If so we will have John Marshall to thank.
Peter Schiff is CEO
of Euro Pacific Precious Metals, a gold and silver dealer selling reputable,
well-known bullion coins and bars at competitive prices. To learn more,
please visit www.europacmetals.com or call (888) GOLD-160.
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