December 17, 2011
World War II and the Genesis of ObamaCareBy Byron W. King
In 2010, a bitterly divided Congress passed President Obama's signature legislative effort, the Patient Protection and Affordable Care Act of 2010 (PPACA, Pub. L. 111-148) -- also called "ObamaCare." PPACA practically federalizes control over the entire U.S. health care system, which accounts for a near 17% share of the U.S. economy.
Opponents of PPACA believe the law is an overreach of federal powers into the personal medical decisions of American citizens. Supporters argue that the law properly exercises federal power under the Interstate Commerce clause of the U.S. Constitution.
PPACA relies, in no small measure, on a Supreme Court case that was hastily decided during America's most desperate days in World War II. Back then, in the depths of war, the Supreme Court decided that the federal government can control personal economic decisions. Yet the circumstances of the case were, to say the least, quite odd.
Indeed, if this old case is what justifies ObamaCare, it's fair to ask if PPACA truly rests on a valid constitutional foundation. At the very least, it's time for the Supreme Court to revisit an extreme point of law that was established in a time of military crisis, during a war that ended 66 years ago.
Federal Court Decisions
Federal district courts have ruled oppositely on the broad legality of PPACA. At one end of the legal spectrum, the district court for the Northern District of Florida held that PPACA is unconstitutional. At the other end of that spectrum, the district court for the Eastern District of Michigan ruled that PPACA is constitutional.
At the Circuit Court level, there are also conflicting decisions. In August 2011, the U.S. Appeals Court for the 11th Circuit, in Atlanta, partly agreed with the decision of the Florida district court. That is, the 11th Circuit ruled 2 to 1 that Congress exceeded its authority by requiring all Americans to buy health care coverage. But in its decision, the three-judge panel reversed the Florida district court decision that invalidated the entire PPACA law as unconstitutional.
More recently, in November 2011, the U.S. Court of Appeals for the District of Columbia ruled that PPACA is constitutional. This ruling -- labeled a "Strange Opinion" by the editors at the Wall Street Journal -- came from Senior Judge Lawrence Silberman, who is well regarded as a "conservative"-leaning jurist.
In fact, it was Judge Silberman who ruled that the District of Columbia's handgun law was unconstitutional under the 2nd Amendment, as a restriction on a personal right to own firearms. Now with ObamaCare, Judge Silberman wrote that "the right to be free from federal regulation is not absolute and yields to the imperative that Congress be free to forge national solutions to national problems."
A National Solution?
On the issue of "national solutions," Judge Silberman's decision cites Supreme Court precedent established during the early days of World War II, namely the case of Wickard v. Filburn, 317 U.S. 111 (1942). Indeed, all of the courts that have reviewed PPACA have cited Filburn in one way or another. What's going on here?
Ask any law student about Filburn, or ask any lawyer who hasn't forgotten too much of what they teach in law school. The Filburn case is all but iconic. It stands for the power of the federal government -- pursuant to the Interstate Commerce Clause -- to regulate economic activity in America down to the actions of any and every individual.
That is, if someone engages in anything that can even remotely be labeled "interstate commerce," then the government can regulate it. In that sense, Filburn is foundational to what's known as "Commerce Clause jurisprudence" in the modern era. Indeed, Filburn is part of the rock upon which is built much of modern federal governance -- and its concomitant economic regulation.
The Odd Case of Wickard v. Filburn
We have to start someplace, so let's start with wheat growing in a field in Ohio. The Filburn case began in July 1941 when, after a spell of good weather, an Ohio farmer named Roscoe Filburn harvested 462 bushels of that wheat. This amount exceeded Filburn's acreage allotment under the Agricultural Adjustment Act of 1938.
In consequence, a local "conservation committee" fined Filburn 49-cents for each of his 239 allegedly excess bushels -- a total of $117.11.
Farmer Filburn was what is -- today -- almost an extinct species. He was an Ohio "family farmer," descended from several generations of Ohio family farmers. Filburn didn't run a large, corporate spread. He lived in a modest house, next to his fields, not far from Dayton. Filburn raised cattle, chickens and field crops, including wheat.
Sometimes farmer Filburn sold his wheat into the local marketplace. Sometimes he just fed the wheat to the cattle. Filburn did what he thought was in his own best interests. According to family lore, Filburn was a proud man, who valued his independence. He's once supposed to have stated that "I never worked for another man in my life."
When farmer Filburn received his notice of a fine -- $111.17, plus a federal lien on his crops -- he was ready to fight. Filburn went to court and challenged both the fine and the Agricultural Adjustment Act as a violation of constitutional limits on Congress's power to regulate interstate commerce.
At First, Filburn Won
The lawsuit, then-named Filburn v. Helke, 43 F. Supp 1017 (1942) went to trial quickly in the Federal District Court for Southern Ohio. In a very short, three-page opinion dated March 14, 1942 the district court ruled in favor of Filburn. The trial judge followed the facts and focused on equity.
The trial court decision described how Filburn planted his "extra" wheat following specific guidance from the Secretary of Agriculture. That is, Filburn did exactly what a cabinet officer had asked of him. At worst, Filburn was "unintentionally misled." The district court also noted that the federal wheat controls amounted to a "taking" of Filburn's property without compensation, contra the protection of the 5th Amendment.
The district court's decision included an injunction, on constitutional grounds, against enforcing the Agricultural Adjustment Act. Procedurally, this entitled the government to take an immediate appeal to the U.S. Supreme Court, under a claim of "manifest error" by the district court. What followed, then, was truly a "rocket docket."
The Filburn Rocket Docket
The timing of the case simply stunning. The U.S. Supreme Court heard oral argument in Filburn on May 4, 1942, less than two months after the federal district court trial decision.
In the first go-round, the U.S. government conceded a point that went back to the very origins of the U.S. republic, and long before. It was the self-evident, historical fact that many farmers raised food crops, such as wheat, for personal and local consumption -- including as feed for cattle.
Just on these facts alone, it was crystal clear that, across the arc of U.S. history and as laid down in long-settled law, farmer Filburn's "extra" wheat was not subject to federal control, let alone to a fine for alleged "over-production."
Then in a very unusual move, on June 1, 1942 the Supreme Court announced that it would review the Filburn case again. The Supreme Court instructed the both sides to brief and argue the issue of whether Filburn's wheat crop fell into the generally accepted realm of federal regulation of interstate commerce. Hold that thought.
The New Deal Evolution of "Commerce"
By the late 1930s, the Supreme Court's Commerce Clause jurisprudence was evolving rapidly in favor of expanding federal authority. In 1937, for example, the Supreme Court upheld the National Labor Relations Act in the case of NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937).
The Jones & Laughlin case expanded the "stream of commerce" metaphor that dominated commerce cases before the New Deal. Jones & Laughlin blurred former traditional distinctions -- rooted in history, as well as case law -- between manufacturing and agriculture. After Jones & Laughlin, the new test for federal commerce ceased being any specific or particular activity, but instead became that activity's "effect upon interstate commerce."
A few years later, in its 1940 - 41 term, the Supreme Court refined its reasoning concerning "effect upon interstate commerce." In a case named United States v. Darby Lumber Co., 312 U.S. 100 (1941), the court upheld Congress's constitutional power to regulate labor standards under interstate commerce. According to the Supreme Court, Congress could act despite any exercise, or not, of state power.
Basically, in Darby Lumber the Supreme Court determined that the federal Fair Labor Standards Act was a legitimate effort by Congress to prevent states from condoning poor labor practices -- poor as compared with federal standards. The idea was that a national-focused government could prevent states (in this case, Georgia) from setting low labor standards to, in effect, improve their economic advantage over other states.
Then Came Filburn
Just over a year after the Supreme Court decided Darby Lumber, farmer Filburn came to town. In Filburn's case over a trifling $117.11, the Supreme Court saw an opportunity to take its Commerce Clause jurisprudence another step.
That is, with Filburn the Supreme Court saw a new opportunity. The court could extend federal power not just over production of goods that were for sale, though not intended to be in traditional interstate commerce. The court could extend federal power even to goods NOT for sale. It didn't matter that the goods were otherwise meant for immediate consumption, such as on a small farm. With Filburn, the court wanted to give the federal government power over personal decisions.
Thus the Supreme Court took another bite at the apple. It ordered reargument on the specific issue of interstate commerce, which effectively shaped the Filburn case to suit a specific doctrinal goal. That is, the court minimized the issues of equity and retroactivity that had formed the basis for the Ohio district court decision.
Or to put it another way, so much for the facts of the case. The new focus of Filburn was on pure, crystallized Commerce Clause jurisprudence -- a philosophical keystone of Pres. Franklin Roosevelt's "New Deal."
After the Supreme Court's summer recess, the parties reargued the Filburn case on October 13, 1942 -- right out of the gate, at the beginning of the new term. Less than four weeks later, on November 9, 1942, the Supreme Court delivered a unanimous decision (9 to 0) in favor of the U.S. government.
The Filburn decision extended federal power over "interstate commerce" down to the grains of wheat in a bushel -- even if that wheat was grown by a small, family farmer to feed the cows. So much for the previous 300 years of American farming, free from government control.
What Was Really Going On?
What was going on? Was it somehow dangerous to the U.S. economy for a small farmer to feed a couple of hundred bushels of wheat to his cows? Or was there something else at work? Was something looming in the background? Well, let's reconsider the facts and the time line.
As lawsuits go, the Filburn case involved a relative pittance. Farmer Filburn's $117.11 fine was the modern equivalent of about $5,000 today, allowing for inflation. Yet when the government lost its case at the trial level, the matter received an expedited appeal to the U.S. Supreme Court. How often does that happen?
Then the Supreme Court heard the first go-round of arguments in May 1942. Soon afterwards -- within a month -- the court ordered reargument on a set of then-novel Commerce Clause issues. It's not hard to conclude that it wasn't farmer Filburn's case anymore. It belonged to the justices
At the beginning of the next term, in October 1942, the Supreme Court quickly listened to arguments about what it wanted to hear, on the new Commerce Clause jurisprudence, the legacy of Jones & Laughlin, as well as Darby Lumber. Within weeks, the court delivered new, plenary Commerce powers to the federal government.
Looking back, Filburn proceeded remarkably fast. It received extraordinary levels of review by the Supreme Court. It resulted in the federal government seizing powers that defied centuries of history, not to mention case law that went back to the days of George Washington. Why? Were the Filburn facts all that compelling?
Why was that legal distinction -- about personal wheat consumption, versus small-scale production for sale -- so critical then and there, in 1942? Was it all that important for the Supreme Court to expand the Commerce Clause and federal power down to the level of a family farmer feeding his cows?
Commerce, Timing and Warfighting
Perhaps it wasn't the facts, or even the law behind Filburn. Perhaps it was the timing of the Filburn case. That is, when the Ohio court issued its decision in March 1942, the U.S. had recently been attacked by the Empire of Japan, and was newly involved in major, declared wars in Europe and Asia -- which wars the country was losing.
On December 7, 1941 the U.S. fleet was sunk at Pearl Harbor by Japanese aircraft. Not long afterwards, the Philippines -- then an American colony -- fell to Japan, while other U.S. territories were also lost. By early 1942 U.S. forces were hurled back all across Asia.
Meanwhile, the U.S. had entered into war with Germany, which had conquered Europe, and whose armies were, for all anyone knew, overrunning the Soviet Union.
Across the oceans, U.S. allies had either lost their wars, or were losing. Much of China was occupied by Japan. France had fallen to Germany. French colonies in Indochina were under Japanese control. The Netherlands and Belgium were overrun, as were the Dutch Indies. Great Britain was isolated by submarine warfare -- in fact, in 1942 an average of over 80 merchant ships were sunk each month in the Atlantic Ocean by German torpedoes. And North Africa was being overrun by German armies.
Help Your Country
In short, in 1942 the U.S. was involved in total war on two fronts, and things did not look good at all. Think about it. If you were sitting on the Supreme Court, what would you do? You'd help your country, if not your president.
As I noted above, the Filburn case went to oral argument at the Supreme Court on May 4, 1942, all of seven very fast weeks after the district court decision. Coincidentally, that date was the same day as the start of the Battle of the Coral Sea.
The Supreme Court ordered reargument on June 1, 1942 -- coincidentally, a week before the Battle of Midway -- not to imply that anyone on the court had access to military secrets related to upcoming battles. But the thing to keep in mind was that these were the times. This was the historical background. The country was at war.
The second round of arguments in Filburn occurred on October 13, 1942 -- during the bitter struggle of the Navy and Marine Corps at Guadalcanal.
Then while the Supreme Court deliberated the case in October 1942, across the Atlantic Ocean German armies were pushing across North Africa towards Alexandria and Cairo, while other German armies were moving into the Soviet city of Stalingrad.
Filburn in Context
On November 9, 1942 the Supreme Court handed down its unanimous decision in favor of the U.S. government. It was less than four weeks after the oral argument. It was a unanimous decision. And at least the justices gave farmer Filburn the courtesy of retiring to chambers to write an opinion.
Of course, the Supreme Court prides itself on deciding only the cases that are before it, and always on the merits of the facts and legal arguments. Then again, there's no way that, throughout 1942, the Supreme Court justices could not have been aware of the precarious military and strategic situation for the U.S. and its allies across the world.
Thus the larger context of Filburn was that the U.S. was mobilizing to fight total, global war, and with no assurance of victory.
The larger context also includes the fact that, as an outgrowth of the First World War, U.S. war planning of the 1920s and 1930s was predicated on the government literally taking over vast swaths of U.S. industry and other commerce. This was well-known national strategic policy. It was hardly a secret to anyone with a passing acquaintance of the operation of the U.S. government, certainly at high levels.
Looking back, it's fair to wonder what the justices really knew and thought as they reviewed the Filburn case, concerning a tiny fine on a paltry amount of wheat destined for cows.
Were the justices thinking, "Our troops are dying. Our ships are getting sunk. Our airplanes are getting blown out of the sky. The country needs to fight this war, and win, yet it's not going well. Now comes some farmer who wants to argue with the government over how much wheat he plants?"
When you look at Filburn in this light, the outcome of the case makes more sense.
Wartime Decision, for Warfighting Powers
Eventually, of course, World War II ended. The U.S. and its allies won. Then the soldiers came home and the nation demobilized. The Filburn case, however, remained on the books. And ever since then, Filburn has staked out an extreme boundary of federal power under the Commerce Clause -- potential control over personal decisions of consumption.
Today, when judges build legal opinions on the Filburn foundation, they're using a tool -- and a legal philosophy -- forged in haste during a war long past.
It's long past time to look at Filburn for what it really was. Yes, Filburn was nominally about the Commerce Clause. That's the legalistic spin. Law professors and federal judges hate it when you argue otherwise.
But Filburn was also a hastily-decided wartime decision that, in no uncertain terms, ratified the U.S. government holding critical, warfighting powers during a time of national peril.
Distilled to its essence, Filburn eliminated all constitutional doubt that, under the interstate commerce clause, the federal government could control the economy. Indeed, the government could control the economy down to the smallest detail of personal consumption -- to the grains of wheat in a bushel.
In the collective mind of the justices, that's probably what they believed it would require to fight and to win a global war.
Filburn and ObamaCare
Now let's come back to the present. When the Supreme Court reviews PPACA, its determination will doubtless revisit and cite Filburn -- perhaps extensively. Thus it's critical that the Supreme Court examine Filburn, all the way down to its factual, legal, procedural and historical DNA.
Is regulating personal consumption, as in Filburn, truly "interstate commerce" within the historical scope of federal powers? Or does Filburn represent a still-active relic of World War II -- an unexploded piece of legalistic ordnance that's never been properly disarmed?
Yes, Filburn provide a warfighting power that the federal government may have required during global conflict and total war. But the war is over, so shouldn't the court now curtail that power? Isn't it time to return a basic freedom from government control to the people?
The Supreme Court addressed Filburn- type issues a number of years ago, in a case called United States v. Alfonso Lopez, Jr., 514 U.S. 549 (1995). But it's now long past time for the court to revisit Filburn, and do so comprehensively and in the full historical context. The upcoming review of PPACA provides exactly that opportunity.
Byron W. King is a geologist, lawyer and retired Navy officer. He writes about economic issues for Agora Financial, LLC
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