ObamaCare and Net Neutrality Regulations – Sharing an Anti-Liberty Theme

by Mike Wendy on February 3, 2011

I wanted to jot down some brief thoughts on what I see as a couple of common threads between the recent ObamaCare court cases, which have declared the so-called “Individual Mandate” as unconstitutional, and last Spring’s  “Comcast” decision, which declared the FCC’s specific use of ancillary authority to regulate Net Neutrality out of bounds:

  • Both sets of decisions deal with proper authority.  That is, any assertion of power by Congress or an Agency must be tethered to enumerated or specific powers in the law.  Though the goals may be important, the means to meet those goals cannot be created out of thin air.  If this were the case, laws would cease to be useful in helping us govern ourselves, being only arbitrary and capricious obstacles easily overcome depending on the political (or other) winds of the day.  That would result in anarchy.
  • Both ObamaCare and the FCC’s Net Neutrality regulations seek to compel behavior or service that might otherwise not occur, or lack economic sense to occur.  For ObamaCare, the Individual Mandate compels all Americans to enter into agreements with private healthcare insurers so that a positive network effect / cross-subsidy arises, ostensibly ensuring funding for universal healthcare.  Individual fines follow for “inactivity” (not purchasing healthcare), thus conscripting Americans into service of the plan whether they want to or not.  Similarly, Net Neutrality compels network providers to serve all “guests” (i.e., content, apps, services, devices, etc.) with only limited exceptions, creating an “easement” of sorts for those guests to enter and use property which is not theirs, and in doing so effectively having their access and voice privately subsidized by the provider.  Network providers must serve these guests, even though common pricing tools (like 2-sided pricing) – which can maximize network resources, provide a return on investment, and promote further innovation – may generally not be used.  As the regulations enlarge (which is their intent), network providers will more closely look like pure utilities / public servants than businesses free to make decisions based on sound economic data and business rationales.
  • As noted in the ObamaCare appeal this week, “Rather than being the mere historic relic of a bygone era, the principle behind a central government with limited power has ‘never been more relevant than in this day, when accretion, if not actual accession, of power to the federal government seems not only unavoidable, but even expedient.’” Both sets of cases deal with law or regulations purportedly designed to do what’s best for the public weal.  But by super-sizing the central government, essentially making its power unlimited, individual liberties, yet again, are the main casualties in these endeavors.

The following are brief excerpts from each case:

From State of Florida v. U.S. Department of Health and Human Services

…Because I find both the “uniqueness” and “economic decision” arguments unpersuasive, I conclude that the individual mandate seeks to regulate economic inactivity, which is the very opposite of economic activity. And because activity is required under the Commerce Clause, the individual mandate exceeds Congress’ commerce power, as it is understood, defined, and applied in the existing Supreme Court case law.

…Thus, rather than being used to implement or facilitate enforcement of the Act’s insurance industry reforms, the individual mandate is actually being used as the means to avoid the adverse consequences of the Act itself. Such an application of the Necessary and Proper Clause would have the perverse effect of enabling Congress to pass ill-conceived, or economically disruptive statutes, secure in the knowledge that the more dysfunctional the results of the statute are, the more essential or “necessary” the statutory fix would be. Under such a rationale, the more harm the statute does, the more power Congress could assume for itself under the Necessary and Proper Clause. This result would, of course, expand the Necessary and Proper Clause far beyond its original meaning, and allow Congress to exceed the powers specifically enumerated in Article I. Surely this is not what the Founders anticipated, nor how that Clause should operate.

…The Necessary and Proper Clause cannot be utilized to “pass laws for the accomplishment of objects” that are not within Congress’ enumerated powers. As the previous analysis of the defendants’ Commerce Clause argument reveals, the individual mandate is neither within the letter nor the spirit of the Constitution. To uphold that provision via application of the Necessary and Proper Clause would authorize Congress to reach and regulate far beyond the currently established “outer limits” of the Commerce Clause and effectively remove all limits on federal power. As the Supreme Court explained in Printz:

When a “Law . . . for carrying into Execution” the Commerce Clause [violates other Constitutional principles], it is not a “Law . . . proper for carrying into Execution the Commerce Clause,” and is thus, in the words of the Federalist, “merely an act of usurpation” which “deserves to be treated as such.”

…Here, the “essential attributes” of the Commerce Clause limitations on the federal government’s power would definitely be compromised by this assertion of federal power via the Necessary and Proper Clause. If Congress is allowed to define the scope of its power merely by arguing that a provision is “necessary” to avoid the negative consequences that will potentially flow from its own statutory enactments, the Necessary and Proper Clause runs the risk of ceasing to be the “perfectly harmless” part of the Constitution that Hamilton assured us it was, and moves that much closer to becoming the “hideous monster [with] devouring jaws” that he assured us it was not.

From Commonwealth of Virginia v. Sebelius

…Despite the laudable intentions of Congress in enacting a comprehensive and transformative health care regime, the legislative process must still operate within the constitutional bounds. Salutatory goals and creative drafting have never been sufficient to offset an absence of enumerated powers…

…Because an individual’s personal decision to purchase – or decline to purchase – health insurance from a private provider is beyond the historical reach of the Commerce Clause, the Necessary and Proper Clause does not provide a safe sanctuary.  This clause grants Congress broad authority to pass laws in furtherance of its constitutionally-enumerated powers.  This authority may only be constitutionally deployed when tethered to a lawful exercise of an enumerated power.  As Chief Justice Marshall noted in McCulloch, it must be within “the letter and spirit of the constitution.” The Minimum Essential Coverage Provision is neither within the letter nor the spirit of the Constitution.  Therefore, the Necessary and Proper Clause may not be employed to implement this affirmative duty to engage in private commerce…

From Comcast v. FCC

…It is true that “Congress gave the [Commission] broad and adaptable jurisdiction so that it can keep pace with rapidly evolving communications technologies.” It is also true that “[t]he Internet is such a technology,” id., indeed, “arguably the most important innovation in communications in a generation,” Yet notwithstanding the “difficult regulatory problem of rapid technological change” posed by the communications industry, “the allowance of wide latitude in the exercise of delegated powers is not the equivalent of untrammeled freedom to regulate activities over which the statute fails to confer … Commission authority.” Because the Commission has failed to tie its assertion of ancillary authority over Comcast’s Internet service to any “statutorily mandated responsibility,” we grant the petition for review and vacate the Order.

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