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Two senses of federalism

June 28, 2012 5:31 PM

Richard Epstein
Laurence A. Tisch Professor of Law, New York University School of Law
Visiting Scholar, Manhattan Institute's Center for Legal Policy

There are many oddities in the decision of the United States Supreme Court, but there is one trend that seems clearly to have been strengthened by the split decision in National Federation of Independent Business v. Sebelius. On the one hand it looks as though the ability of the federal government to impose direct regulations on individuals has been increased by the decision. There is nothing in the case that cuts back on the scope of Wickard v. Filburn that deals with the ability of the government to regulate all sorts of activities, no matter how small, that have some substantial effect on commerce in the aggregate. That power is the source of great mischief because it permits the federal government to organize cartels in agriculture that the states themselves could never put together.

Yet at the same time, this new found tax is an expansion of the taxing power to cover an odd set of activities including not buying health care insurance. So add the two points together, and there is more direct power in the federal government over individuals than before the case, or at least there is not less.

Yet the Court also struck down the Medicaid extension as coercive against the states. That decision rested on the view that it is not permissible to take away all Medicaid money from states that do not choose to agree to the Medicaid expansion. What it suggests is that the exercise of federal power in commandeering the states is now more limited than we had previously expected. After all, every lower court rejected the challenge that was accepted 7 to 2.

It will take a long time to sort out the relative strength of the two decisions. But make no mistake about it, knocking down a multi-billion dollar initiative is no small potatoes.

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Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.