Corrective Justice, Reparations, and Race-Based Affirmative Action

I recently published a short essay (2500 words or so) regarding affirmative action with The Arkansas Journal of Social Change and Public Service, an online, student-run journal published at my law school. The article is available here. Comments are welcome, as always. Also, feel free to circulate as widely as you deem appropriate and in whatever ways are most convenient.

Brief Thoughts on Obergefell, the Same-Sex Marriage Case

I don’t have time right now for a comprehensive analysis like with the Obamacare case.  So here are some quick thoughts and I may follow up with more details at a later time.

1.  I agree with the result.  I think the Constitution does protect a right to same-sex marriage.  And I think the result in this case is the natural extension of existing precedent.  There were multiple analytical bases to get to this result, all of which I find persuasive.

2.  However, I think the issue is a close call.  Thus, a 5-4 result is both unsurprising and justified.  In my view, the majority is correct, but by a small margin.  The dissenters are on very firm ground in disagreeing with the result, and even firmer ground in raising concerns about Kennedy’s  interpretive methodology.

3.  Kennedy has become quite a master at the use of sweeping language.  Much of what he wrote is beautiful.  But beauty needs to be backed up with analytical rigor.  And in the latter department, Kennedy’s opinions is lacking.  Not like in Lawrence v. Texas (the 2003 sodomy case), but it is still too all-over-the place.  In addition, Kennedy appears to have finalized his rejection of the long-established framework for addressing due process and equal protection issues (at least in “family privacy” cases).  I wish he had been more explicit about the fact that he was doing so.  

4.  Roberts’s dissent is very solid.  He is a terrific writer.  And much of his analysis is excellent (though he does overstate the case in a number of places).

5.  As I said above, I do think the dissents make important points about the dangers of Kennedy’s sweeping language and the interpretive methodology it suggests.  However, I ultimately think their worries for democracy are somewhat misplaced.  The Court will never go as far as they fear, even with Kennedy’s broad rhetoric available as a tool.  Moreover, the result today is not as extreme as Roe, which remains at the outer boundary of “substantive due process”—the source of the constitutional right to privacy/liberty/autonomy.  But the dissenters’ concerns are certainly understandable.  An honest reading of Kennedy’s opinion could easily justify some pretty dramatic results.  Nonetheless, the better reading is a more circumscribed view of constitutional liberty.  In other words, Kennedy’s sweeping language must be read in the context of the history of “family privacy” cases—marriage, contraception, abortion, initiate relations.  Limiting his language to that domain, today’s case does not create quite the danger that the dissenters contend.  Again, though, there are legitimate bases to stretch the case beyond family privacy, and then the dissenters fears could, in theory, be realized.

6.  Some news reports have questioned how Roberts can be “on both sides” in these two cases--the Obamacare case and this one.  But there is nothing contradictory about what Roberts did.  In each case, he took the side of judicial restraint based on extremely plausible interpretive arguments.  Roberts may be wrong in one, both, or neither of the cases.  But his approach was deeply principled.

7.  I think this is a very good day for constitutional liberty generally and a truly great day for GLBT rights specifically.

Analysis of King v. Burwell -- The Obamacare Tax Subsidies Case

Here are my thoughts on the Supreme Court’s decision on June 25, 2015, in King v. Burwell.  In that case, the Court ruled that tax subsides are available to those purchasing health insurance on both (1) exchanges set up by a state itself, and (2) exchanges set up by the federal government for a state.  I agree with the Court’s ruling.  While I believe reasonable minds can differ in this case—something that is virtually always true when the decision is 6 to 3—I think the majority has the better argument, and by a good margin.

 

It will be difficult for me to write a summary of the case that digs deeply into the substance without almost rewriting the various opinions in full.  That is because complex statutory interpretation cases, like complex contract interpretation issues, come down to the weight of the evidence taken as a whole.  There are numerous relevant categories of evidence in these types of lawsuits.  And there are often multiple pieces of evidence from each category.  That is certainly true in King v. Burwell.  As a result, any true summary that I could write would leave out critical detail.  Given that, and for reasons of time, I am going to summarize the opinions in more general terms and include selected arguments for each side.

 

Before getting to those thoughts, however, let me note that statutory interpretation is not rocket science.  And it does not take a law degree to understand the basic concepts, even if it does take such a degree to capture some of the deeper nuances.  Accordingly, given that the case is not that long, those nonlawyers (and lawyers) deeply interested in this matter ought to consider reading the case in full rather than relying solely upon my assessment below.  The opinion is available here on the Supreme Court’s website.

 

Now, to business.  The Affordable Care Act says that tax subsidies are available to those people who buy health insurance on an exchange “established by the State.”  Given that the statute defines “State” to mean the 50 states and some territories, there is a good case that the four-word phrase “Established by the state” means that a person may only receive tax subsidies if the person buys insurance on a state exchange; those purchasing on a federal exchange may not receive the subsidies.  However, the single most important principle in statutory, contractual, and constitutional interpretation is that language must be read in context.  And the full context of the statute creates a powerful argument that “established by the State,” as used in the relevant provision, does not rule out subsidies on federal exchanges.  Indeed, Chief Justice Roberts marshals multiple types of arguments to make a compelling case that the tax subsidies apply to both state and federal exchanges, including (1) textual arguments (a close reading of the text), (2) structural arguments (analyzing the relationship of textual provisions throughout the statute), (3) purposive arguments (assessing the purposes or goals of the act, as reflected in both the language of the statute and material from outside the statute—called “extrinsic evidence”—such as legislative history), and (4) consequential arguments (focusing on the consequences of various interpretations and how those consequences match up with the language and purposes of the statute).

 

For an example of a close textual reading, the statute provides that if the state chooses not to set up an exchange, the federal government “shall . . . establish and operate such Exchange within the state.”  (Emphasis added.)  Roberts argues that this means that federal exchanges essentially stand in for state exchanges and should be treated in the same manner for many purposes.  In other words, Roberts is saying that the words “such exchange” support the conclusion that any federal exchange just is a state exchange (for many purposes).

 

For an example of a structural reading, Roberts points out that if tax subsidies are only available on state exchanges, then there will be no individuals who meet the tax subsidy eligibility standards in states with a federal exchange.  But, Roberts continues, the statute “clearly contemplates” that there will be qualified individuals for every exchange because all exchanges must make available health plans for qualified individuals.  How can an exchange make available health plans for qualified individuals if there are no qualified individuals for that exchange?  To put this argument in broad terms, Roberts is arguing that between the two readings of “established by the State,” one creates a conflict with other language in the statute and one doesn’t.  Consistent with long-established canons of statutory (and contractual) interpretation, it is better to chose the reading that avoids the conflict—the reading that allows subsidies for the federal exchanges.

 

Here is an example of an argument that combines structural, purposive, and consequentialist reasoning.  First, some basic principles.  The guaranteed issue provision requires that insurance companies provide insurance to anyone who requests to buy it regardless of preexisting conditions.  The community rating provision requires that everyone be charged largely the same price for health insurance regardless of their health condition.  And the individual mandate provision requires that everyone own insurance or pay a tax/penalty.  Roberts argues that these provisions will not work together as intended by the Affordable Care Act if the tax subsidies are not available on federal exchanges.  That is because, without the subsidies, many people cannot afford to buy insurance on the exchanges.  Most of those people will then be exempt from the individual mandate under one of the exceptions in the law and thus need not buy insurance.  Next, if the healthy people in that group do not buy insurance and the sick people do (a very likely occurrence), that will raise premiums, pricing more healthy people out of the market.  Finally, as more people are priced out of the market, insurance will become even more expensive, creating a feedback loop that Roberts calls a “death spiral.”  That feedback loop will defeat essential purposes of Obamacare reflected throughout the statute.

 

Roberts makes other powerful arguments.  In fact, I agreed with almost every point he made.  I do believe he overstated his case in a couple of places.  But overall, his arguments—and responses to the dissent’s arguments—were excellent.

 

Turning to the dissent, Justice Scalia presented a number of solid points.  But unlike Roberts, he also makes a number of unpersuasive arguments; and he overstates in multiple places.

 

Scalia makes more than a dozen distinct arguments in the dissent.  But I think three stand out from the others as strong bases for his position.

 

First, Scalia contends that the words “exchange established by the State” will have no meaning in the provision in question if that provision applies to both federal and state exchanges.  Such a result violates the canon of interpretation that all words in a legal text should be given meaning, if possible.  But I called this a “canon” for a reason.  It is not a rule.  It is just one, albeit important, factor to consider when interpreting legal language.  Moreover, the canon may not even apply here.  Remember that Roberts essentially argues that “established by the State” incorporates the federal exchanges due to other language (e.g., “such exchange” discussed above).  That would mean the three highlighted words do have meaning—just not their ordinary meaning.

 

Second, Congress chose to use the word “exchange” in some places and the phrase “exchange established by the State” in others.  That suggests that “exchange” and “exchange established by the State” have different meanings.  Point for Scalia.  This is one of Scalia’s strongest arguments, if not the best.

 

Third, Congress wrote that if a territory establishes an exchange (e.g., Puerto Rico, Guam, or the U.S. Virgin Islands), it shall be treated the same as if a state established the exchange.  Why didn’t Congress do the same with respect to exchanges established by the Federal Government?  Another good argument for Scalia.  However, Roberts essentially argues, in response, that Congress did not need to craft a similar provision for federal exchanges because the phrase “such Exchange,” discussed above, obviated the need to do so.

 

These three points, when mixed with a couple of other decent arguments Scalia offers, are simply not sufficient to overcome the much larger collection of persuasive arguments that Roberts presents.

 

As I said, Scalia also makes some unpersuasive arguments throughout his dissent.  Here are three examples. 

 

First, Scalia writes that it would be “hard to come up with a clearer way to limit tax credits to state Exchanges than to use the words ‘established by the State.’”  This is false.  In fact, it is actually quite easy to come up with stronger language.  Scalia fails to see this because he ignores a basic and recognized principle in both statutory and contract drafting: If your goal is to exclude something, it is always more effective to exclude that thing expressly than it is to implicitly exclude it by simply leaving that thing out of a list of what is included.  And failing to follow this rule has cost legislatures and contracting parties in more cases than I can count.  Given this principle, here are three examples of how the language could more clearly have prohibited subsidies on the federal exchanges:

 

1.         “. . . exchanges established by the State, excluding those created by the Secretary of Health and Human Services,”

 

2.         “. . . exchanges established by the State pursuant to [the section setting forth the precise manner in which state exchanges are created] and not pursuant to [the section setting forth the precise manner in which federal exchanges are created]

 

3.         “. . . exchanges, except those established by the Secretary of Health and Human Services.”

 

All of these are clearly superior to the current wording in the statute, if the goal is to establish that tax subsidies do not apply to federal exchanges.

 

Second, Scalia essentially argues that “established by the State” must have the same meaning in each provision in which it is used in the act.  And if the four words are ignored when it comes to tax subsidies, the same must be true elsewhere.  This is incorrect.  It is indisputable that the same language can, and often does, mean different things in different contexts, even within the same statute or contract.  The fact that the same phrase is used in two places in a law or contract is important evidence that the meaning is the same.  But it is not the stringent rule that Scalia suggests.  Moreover, Roberts is best read as not actually arguing that the words mean something different in the relevant provision.  Instead, he is arguing that the provision, when read in context, does not exclude tax subsidies from federal exchanges because federal exchanges are supposed to be treated the same as state exchanges (at least for this purpose).

 

Third, according to the majority, if the tax subsidies are not available, then certain other provisions in the law would make little sense.  Scalia responds by saying that this only shows “oddity, not ambiguity.”  But here Scalia misses the point.  Oddity is precisely one of the bases that counts in favor of rejecting an interpretation.  Scalia is correct that oddity and ambiguity are two different things.  But the odder the result of an interpretation, the weaker that interpretation is.  Scalia continues by saying that laws often have unusual or mismatched provisions.  But when an interpretation leads to an usual result or a mismatch of two sections of a statute, that counts against the interpretation.  This result flows from multiple canons of construction, including (1) the preference for reasonable interpretations, (2) the preference for interpretations that are consistent with the principal purpose of a law, and (3) the canon that provisions should be read in harmony if possible.

 

Let me end by noting that King v. Burwell is a rather run-of-the mill case on statutory interpretation.  The opinions reflected some of the basic divisions among the members of the Court (and among lawyers and law professors more generally) regarding the appropriate method for interpreting statutes (and contracts and constitutions).  But both Roberts’s majority opinions and Scalia’s dissent were perfectly normal Supreme Court opinions addressing a perfectly mundane case (from the perspective of statutory interpretation).  Yes, this case had high political salience.  Thus, the attention it will get and the rhetoric it will spawn is going to be abnormal.  Indeed, Scalia’s dissent is filled with sky-is-falling rhetoric.  But that is rather common in dissents in cases like this—cases with high political salience.  Had Roberts and Kennedy sided with the Conservatives, I am rather sure that one of the four Liberals would have used similar rhetoric in dissent, much like Ginsburg (wrongfully) did in the Hobby Lobby/religious accommodation case.   In short, do not believe any statements that this case has “fundamentally altered our constitutional order” or any other such hyperbolic nonsense.  This was a typical statutory construction case, quite similar to the statutory and contract interpretation disputes American courts handle every day.

Thoughts on the Hobby Lobby Case

So, a lot of people have been asking for my opinions re. the Hobby Lobby case.  Originally, I wasn’t even going to read it, but given all of the requests, I broke down and did so.  So here are the thoughts I have.

 

First, it is important to understand that the Court did not rule on constitutional grounds.  While constitutional arguments were raised, the Court resolved the issue on statutory grounds under the Religious Freedom Restoration Act (RFRA).

 

Second, I agree with the result in the case.  I think the Court’s argument that for-profit corporations are entitled to protection under RFRA is quite persuasive, and it is telling that Breyer and Kagan did not join the part of Ginsburg’s opinion that argued otherwise.  (Only Sotomayor joined that part of the dissent.)  And I think the Court’s conclusion that RFRA nullifies the contraception mandate is the better reading of the statute.  It is closer call than the question of whether corporations are covered at all.  But I think the Court got it right.  Interestingly, however, the majority left a strong argument off the table.  When a federal law burdens religion, RFRA requires that the law both (1) serve a compelling state interest and (2) be narrowly tailored to serve that interest.  The Court here ruled that the contraception mandate violated (2).  But the Court assumed for the sake of argument that the mandate served a compelling interest under (1).  I’m actually skeptical there.  Based on my understanding of compelling state interest doctrine more generally, I think there are some great arguments that there is no compelling interest in requiring that employers provide the full spectrum of contraception options.  (The Court touched on some of these, but didn’t dig into the analysis because it decided that a careful examination of the narrow tailoring requirement is all that was necessary.)

 

Third, there has been a lot of talk from Liberal sources about how great Ginsburg’s opinion was.  I don’t think it was terrible, but I think she is getting way too much credit.  This was not her best work.  There were multiple places in her dissent where I thought she was dead wrong or deeply unpersuasive.  She did make some good points, both on whether corporations get RFRA protection and on whether the mandate is narrowly tailored, but not enough to persuade me on either point.

 

Fourth, lots of people are worried that this case will lead down the slippery slope to a parade of horribles.  But if it does, that isn’t the Supreme Court’s fault; it is the fault of those who voted for RFRA in the first place.  Indeed, Justice Scalia warned of precisely this possibility in 1990.  Let me elaborate.

 

Let’s start with a little background.  In the 1960s and 1970s, the Supreme Court decided two cases—Sherbert & Yoder—under the Free Exercise Clause of the First Amendment.  These cases required generally applicable laws that burden religion to meet a very high standard.  To determine whether a challenged government action violated the Free Exercise Clause, the two cases used a balancing test that asked whether the challenged action imposed a substantial burden on the practice of religion, and if it did, whether it the law was needed to serve a compelling government interest.  This is a form of what is known as “strict scrutiny,” the most difficult standard for the government to overcome when it is potentially violating a constitutional right.

 

In 1990, in Employment Division v. Smith, the Court overruled Sherbert & Yoder (and correctly so in my view), and decided that strict scrutiny does not apply to generally applicable laws that happen to burden religion.  This is the case that involved Native Americans using Peyote.  The Court held that the Native Americans were not entitled under the First Amendment to an exemption from the generally applicable drug laws that forbid Peyote use.  Justice Scalia explained the basis for overruling Sherbert and Yoder this way:

 

If the “compelling interest” test is to be applied at all, then, it must be applied across the board, to all actions thought to be religiously commanded. Moreover, if “compelling interest” really means what it says . . . many laws will not meet the test. Any society adopting such a system would be courting anarchy, but that danger increases in direct proportion to the society's diversity of religious beliefs, and its determination to coerce or suppress none of them. Precisely because “we are a cosmopolitan nation made up of people of almost every conceivable religious preference,” . . . and precisely because we value and protect that religious divergence, we cannot afford the luxury of deeming presumptively invalid, as applied to the religious objector, every regulation of conduct that does not protect an interest of the highest order. The rule respondents favor [the Sherbert & Yoder rule] would open the prospect of constitutionally required religious exemptions from civic obligations of almost every conceivable kind-ranging from compulsory military service . . . , to the payment of taxes . . . , to health and safety regulation such as manslaughter and child neglect laws . . . , compulsory vaccination laws . . . , drug laws . . . , and traffic laws . . . , to social welfare legislation such as minimum wage laws . . . , child labor laws . . . , animal cruelty laws . . . , environmental protection laws . . . , and laws providing for equality of opportunity for the races. The First Amendment's protection of religious liberty does not require this.

 

494 U.S. at 888-889.  In other words, Scalia’s point was that applying strict scrutiny to all Free Exercise challenges to generally applicable laws could lead to an explosion of litigation, threatening the nation’s ability to govern in numerous areas.

 

RFRA was expressly intended to reverse Smith and return us to the pre-Smith caselaw—the caselaw that Scalia warned could lead down the slippery slope.  Of course, RFRA couldn’t change the Constitution.  But the Federal Government is entitled to limit the circumstances in which it acts by statute, and that is all RFRA did.  (Actually, it also tried to limit the states, but the SCT ruled that Congress couldn’t do that in 1997.)  RFRA provides that the Court should hold all other federal statutes to the standard set forth in Sherbert and Yoder as a matter of statutory law.  If that leads to an avalanche of litigation, the proper response from Scalia and the Conservatives who joined him is “we told you so.”  (Note that the Hobby Lobby majority has all sorts of language in their opinion re. why this case doesn’t go as far as people think.  I thought most of those parts of the opinion were not persuasive.  But only time will tell whether there will actually be a flood of litigation and the effect it might have.  This is a matter of empirical fact, not legal analysis.)

 

Remember that RFRA was passed by overwhelming majorities in both houses of Congress, had massive support from Democrats and Liberal organizations, and was signed by Democrat President Bill Clinton.  Thus, in my view, Democrats and Liberals have no one to blame but themselves for the predicament we may now be facing.

 

Let me sum up my fourth point.  1.  Smith warned that the prior caselaw could lead us down the slippery slope.  2.  RFRA was passed expressly so that we returned to that caselaw.  3.  Now we might be faced with sliding down the slippery slope into an avalanche of litigation.  Given 1 and 2, it is difficult for me to understand why legally educated and other sophisticated folks are surprised that we are now at 3.

 

Fifth, I don’t like the result of Hobby Lobby on policy grounds.  I would repeal RFRA, or at least modify it substantially.  That wasn’t always my view.  RFRA was enacted around the time I started law school.  And when I read Smith as a 2L in my Constitutional Law course, I thought Scalia was wrong.  Thus, I liked RFRA.  But by my third year of law school, I had changed my views and concluded that Smith was correctly decided (at least insofar as it overruled Sherbert and Yoder) and that RFRA was a dangerous statute that could eventually cause all sorts of problems.  Now, I’m not sure we will experience the problems that Scalia warned about in Smith.  But if we do, the answer is to repeal or modify RFRA, not complain about the actions of the Supreme Court.

 

Sixth, very briefly, there is some language in the majority opinion that undercuts the reasoning in Citizen’s United in pretty compelling ways re. the status and nature of corporations.  I doubt anything will come of it, but it was quite interesting to see.

 

Those are my thoughts.

The Paulson Bailout

Professor Tabarrok:

 

I read your very interesting article/blog post entitled “What Credit Crunch” a little over a week ago.  I found it very persuasive.  Since then, I’ve been sending emails, making calls, and writing blog posts that largely contain the following content:

 

            I’ve been skeptical that the credit crunch is all that serious for quite some time because of Federal Reserve data re. loans to businesses and consumers.  And I have been very opposed to the Paulson Plan for this and many other reasons.  Now, admittedly, the freeze in interbank lending (et al) might finally be starting to have some significant impact on the non-financial sectors of the economy.  Assuming that this is true for the sake of argument, and that the government needs to step in (which I have no problem with in theory being a Liberal Democrat), what about low-interest or interest-free loans to the banks and institutions that didn’t invest in mortgage-backed securities?  In other words, if the problem is that there is insufficient credit getting to the “real” economy, the government can use the 700 billion (or some other amount) to extend loans to banks that followed the best practices, and these banks can in turn lend the money to consumers and businesses at more standard rates.  It seems to me that this would more directly address the problem of insufficient credit while at the same time avoiding the moral hazard created by bailing out banks and other firms that overextended or made bad bets.  To paraphrase what Alex Tabarrok, Professor of Political Economy at George Mason University, said – why not increase lending “traffic” over the good bridges (i.e., banks, the intermediaries between lenders and borrowers) rather than trying to rebuild the bridges that have burned down (the banks with the “toxic assets”)?  Some economists are suggesting something along these lines.  Do you have any thoughts about this?

 

As you can see, I found your arguments very persuasive.  What I’m curious about is why so few people are talking about alternative options to purchasing the “toxic assets.”  Have you been in touch with people?  I’ve seen other economists making points similar to your’s.  Is this just a case of Paulson and Bernake throwing out an idea and sticking with it despite arguments that there are better approaches?

 

If you have any thoughts, and have time to share them, I’d love to hear what you think.

 

Josh

 

Letter To Brad DeLong

Professor DeLong:

I’m a law professor teaching commercial law and legal philosophy. I’m also very interested in economics, though obviously no where close in understanding to you and many of your colleagues who have been publicly addressing the economy lately. I have a question/proposal I wanted to run by you.

I’ve been skeptical that the credit crunch is all that serious for quite some time because of Federal Reserve data re. loans to businesses and consumers. And I have been very opposed to the Paulson Plan for this and many other reasons. Now, admittedly, the freeze in interbank lending (et al) might finally be starting to have some significant impact on the non-financial sectors of the economy. Assuming that this is true for the sake of argument, and that the government needs to step in (which I have no problem with in theory being a Liberal Democrat), what about low-interest or interest-free loans to the banks and institutions that didn’t invest in mortgage-backed securities? In other words, if the problem is that there is insufficient credit getting to the “real” economy, the government can use the 700 billion (or some other amount) to extend loans to banks that followed the best practices, and these banks can in turn lend the money to consumers and businesses at more standard rates. It seems to me that this would more directly address the problem of insufficient credit while at the same time avoiding the moral hazard created by bailing out banks and other firms that overextended or made bad bets. To paraphrase what Alex Tabarrok, Professor of Political Economy at George Mason University, said – why not increase lending “traffic” over the good bridges (i.e., banks, the intermediaries between lenders and borrowers) rather than trying to rebuild the bridges that have burned down (the banks with the “toxic assets”)? Some economists are suggesting something along these lines. Do you have any thoughts about this?

I’m sure you are extremely busy with everything going on. But I wanted to send this along to see if you had some thoughts because I’ve always admired your work.

Josh

Joshua M. Silverstein
University of Arkansas at Little Rock
William H. Bowen School of Law
jsilver220@gmail.com