"The private sector is doing fine." So said President Obama in a June 8 press conference. Every day since, in TV ads paid for by Mitt Romney and a phalanx of political committees purporting, falsely, to be independent, he's been pilloried for saying so, and for being out of touch with our economic troubles.
But my fellow citizens, I am here to say on this July 4, as we celebrate the 236th anniversary of our nation's founding and ponder the status of our precious liberties, that Obama was right. The private sector is doing fine. The owners of capital are fine. Their liberties are fine. It's working people's liberties that are not fine.
And by fine, I don't mean what the president was attempting to say: that the private sector is doing better than the public sector. Contrast the steady growth in private-sector employment—up for 27 consecutive months with a total of 4.2 million jobs added—with the nearly two years of declining employment in the public sector. That's what he was talking about in his press conference, though you'd never know it from the attack ads.
No, I mean fine as in the corporate interests are playing to win. Unless they're stopped, they will eventually control every aspect of American life, including a federal government that our founders believed would represent We the People.
Meanwhile, the laboring classes—those of us who work (if we can find a job) for companies we don't own—are in danger of losing our rights as citizens to curb corporate greed and require that companies serve the public interest.
In the founding documents, these rights were associated with such concepts as the pursuit of happiness, promoting the general welfare, guaranteeing a republican form of government—not an oligarchy or fascism—and, above all, with the principle that the laws should serve a common good, not just a fortunate few.
So now consider where we are this July 4:
- Corporate profits in the U.S. are at an all-time high, according to data compiled by the Federal Reserve Bank of St. Louis (see graph above), the Great Recession and persistent 8 percent unemployment notwithstanding. In fact, profits are high because unemployment is so high, thus depressing wages. Moreover, many of those corporations make money by outsourcing jobs to even cheaper labor markets abroad. Meanwhile, U.S. wages as a percentage of the nation's economic output have dropped to a historic low.
- Corporate influence in our national affairs is also at an all-time high. Yes, I realize that an argument can be made for the robber barons of the late 19th and early 20th centuries, but they had nowhere near the reach or resources of today's global capitalists. J. Pierpont Morgan, banker to such early American trusts as U.S. Steel, which, whatever else it did, at least employed American workers; meet JP Morgan Chase & Co., which swallowed your bank and 1,200 other "predecessor" banks and investment companies. Today, it's a global colossus with operations in more than 60 countries and loyalty to none of them.
- Meanwhile, a five-member majority on the U.S. Supreme Court threatens to cripple our power as citizens to regulate corporate commerce, including multinationals like JP Morgan Chase, under laws enacted by our elected representatives in Congress.
- The same court majority, however, grants corporations and their wealthy owners and investors the right to spend unlimited sums of money in political and lobbying campaigns, often anonymously. It treats corporations as if they were people entitled to protected speech under the First Amendment.
The Supreme Court's allegiance to corporate interests factored throughout its most recent term. For example, it ordered Montana to abide by its holding in the 2010 Citizens United case, thus permitting corporations to pour money into state political campaigns. The court's order overturned a 1912 Montana law passed at the close of an era of political corruption fueled by mining companies buying politicians.
But nowhere was the court's fealty to business more clearly on display than in the decision, handed up Thursday just prior to adjournment, in National Federation of Independent Business et al. v. Sebelius.
In that case, the court by a 5-4 vote upheld the constitutionality of the Patient Protection and Affordable Care Act, also known as Obamacare.
It was a victory for the Obama administration, no doubt. But more than that—and perhaps more important in the long run—it was a victory for corporations. In fact, it was a double victory.
First, a five-member majority upheld the idea that citizens can be required to buy health insurance (per the much-disputed individual mandate) from private corporations, including for-profit corporations.
But it was an unusual majority, as you've surely heard. The four moderate-to-liberal justices on the court supported the individual mandate. They found it to be an unremarkable exercise of Congress' power to regulate interstate trade under the commerce clause of the Constitution. It was unremarkable only because of the uniqueness of the U.S. health-care industry, as compared with systems in other leading nations: Here it is an industry engaged in commerce, while other countries place health care under government control.
If you want health care in American, the four moderate-to-liberal justices said in an opinion written by Ruth Bader Ginsburg, and you're not old enough for Medicare or aren't poor enough for Medicaid, you have to buy it from corporate interests. And since everyone uses health care at some point, it's completely reasonable for Congress (reasonableness has always been the constitutional standard for judging commerce clause enactments) to require that everyone help pay for health care by obtaining insurance.
However, the five other justices, all solid conservatives, dislike the commerce clause. They consider the notion that Congress should be allowed to regulate business in any and all reasonable ways to be a violation of the principle of limited government—and possibly the 10th Amendment: "Powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the People."
In their zeal to erect a limit on Congress' powers over commerce, four of the conservatives, Justices Anthony Kennedy, Antonin Scalia, Clarence Thomas and Samuel Alito, were prepared to declare all of Obamacare unconstitutional.
But the fifth, Chief Justice John Roberts, was not. He wanted to limit Congress, but he didn't want to toss Obamacare. So Roberts wrote an opinion agreeing with his fellow conservatives that Obamacare—this law regulating commerce—was unconstitutional under the commerce clause. But regardless, Roberts said, it is constitutional as a tax.
A tax? Wait a minute. If that's true, wouldn't any regulation of commerce, if it included penalties for noncompliance—as they routinely do and as the individual mandate in Obamacare does—be deemed a tax and therefore constitutional?
Still, by Roberts' tortured logic this regulation-with-penalties isn't a regulation but a tax. And if you go with that, corporations emerge from the Obamacare debate with the best of both worlds.
The health-care law the corporations wrote was upheld—and make no mistake, Obamacare wasn't written by the White House or Congress as much as it was by Big Pharma, the American Medical Association, the American Hospital Association and the U.S. health-insurance industry—even though it puts individual consumers at the mercy of corporations.
But five justices, a majority of the court, are now on record as saying that the powers of Congress to regulate commerce are somehow limited. When five justices take a position like this, it's precedent-setting, and every lower court in America is supposed to follow it.
Look out below for pro-business judges, unleashed by the Roberts Court, to take a run at laws that protect the public but that corporations find to be—they love this word—onerous.
So will Obamacare, the decision, be a watershed in American government? The answer might depend on the Obama-Romney election and whether Republicans, now in control of the House, can take the Senate and the White House in November.
As Yale Law School Professor Jack Balkin wrote in his blog on Friday, Roberts' opinion "stick[s] a knife in the back of the Commerce Clause argument." But Roberts doesn't twist it—not yet.
Remember, Roberts was alone in his opinion. The four other conservative justices wrote an unsigned dissent declaring that Roberts was wrong and that Congress had no power to enact Obamacare under the Commerce Clause or its taxing authority. All their radical view lacks is a fifth right-winger on the court, and it will take hold with or without Roberts.
If Obama is re-elected, Balkin said, he could safeguard the Commerce Clause by appointing a liberal to replace Justice Kennedy, should Kennedy retire. (He will be 76 this month.) That would leave just three right-wingers trying to kneecap the Commerce Clause, or four if you count Roberts.
But, Balkin went on, if Romney is elected, he could appoint a sixth conservative justice if, say, Ginsburg should retire. (She is 79.) Then, he added, "Roberts' seemingly compromised opinion won't be very compromised at all. His apparent flip-flop won't be understood as a change of mind ... [but instead] may turn out to be, in hindsight, the beginning of an important transformation in constitutional law."
The impact of such a transformation on the lives of average Americans is impossible to foretell. But at a minimum, as Ginsburg wrote in her opinion, it "harks back to the era [prior to the New Deal] in which the Court routinely thwarted Congress's efforts to regulate the national economy in the interest of those who labor to sustain it."
That era ended with the Great Depression. Subsequently, Congress and President Franklin D. Roosevelt were able to enact, without court interference, a slew of laws to revive industry and put people back to work—but also to reform banking and business practices and strengthen the powers of labor unions to organize workers.
From 1937 until 1995, a half-century during which the United States emerged as the most prosperous nation on earth, the Supreme Court struck down not a single law as being in violation of the Commerce Clause. As companies gained national scope, the federal government expanded its regulatory powers. States, played off against one another by business, were less and less able to enforce laws on protecting working conditions or the environment if other states—eager to lure companies away—set looser standards. To protect the common good, federal standards were needed.
Not surprisingly, business pushed back. In 1971, Virginia lawyer and tobacco industry lobbyist Lewis Powell wrote a memo to the U.S. Chamber of Commerce entitled "Attack on the American Free Enterprise System." Powell wrote that left-wing forces, including an intellectual elite with an engrained distrust of business, were besieging the free-enterprise system. Corporate interests must be defended in the courts as well as the legislatures, Powell wrote.
Powell's memo is remembered as the beginning of a major corporate push to influence judicial appointments to federal and state courts. It also presaged a 1978 opinion issued by Powell, by then a Supreme Court justice, in the case of First National Bank of Boston v. Bellotti.
Powell's ruling, for a 5-4 court, said that private corporations had a First Amendment right to free speech protections—the same as citizens do—when they make independent expenditures intended to influence policy outcomes. A Massachusetts law curbing corporate political spending was struck down.
Move the calendar ahead 32 years, and Justice Kennedy's ruling in Citizens United, again for a 5-4 court, draws directly from Powell. It declared that limits on corporate political spending in the landmark McCain-Feingold campaign reform law were unconstitutional.
The open spigot of corporate money pouring into the 2012 campaign, especially by "independent" committees out to take down President Obama, is the result. Groups like Americans for Prosperity, a creation of the billionaire owners of Koch Industries, raise money for ads that don't explicitly tell you to vote for Mitt Romney. They just tell you that Barack Obama is a liar and incompetent.
That's free speech.
Not only is it free speech, but "independent" committees, organized as nonprofit corporations or Super PACs, can accept unlimited contributions from wealthy individuals and corporations without disclosing the donors. Thus, for example, Crossroads GPS, an attack organization started by former George W. Bush adviser Karl Rove, is required to disclose what it's spending but not where the money came from.
The deregulation of corporate political spending was one goal of the Federalist Society, a network of conservative lawyers in which Justices Kennedy and Scalia, in particular, have been active. A larger goal for the group is the rollback of federal corporate regulations, period.
The idea, which Georgetown Law School Professor Lawrence Solum described in a recent blog post, is more a way of thinking about government powers, than it is (yet) a constitutional doctrine. This view concludes that the federal government has usurped the states' legitimate role of regulating corporate conduct. Thus, judges should be seeking opportunities to return power to the states, not to allow expanded federal powers under the Commerce Clause.
As a result of the Obamacare ruling, Solum wrote, this alternative view of the Commerce Clause—"is no longer an outlier, a theory endorsed by a few eccentric professors and one odd justice [Thomas] of the Supreme Court."
Instead, it's been endorsed by at least four justices. Therefore, Solum concluded, "things are now 'up for grabs' in a way no one anticipated when the saga of the constitutional challenge to the Affordable Care Act began."
On Saturday, the state chapter of Americans for Prosperity and the Civitas Institute gathered 300 followers at the Crabtree Valley Marriott in Raleigh for hot dogs and political red meat under the banner "Hands Off My Health Care." The two groups are funded by Art Pope, the multimillionaire Raleigh businessman who puts vast sums of money where his conservative views are, and by the aforementioned Koch brothers, David and Charles.
Dallas Woodhouse, AFP's state director, told his listeners that he was in tears (for his country) the day Obamacare was upheld. But now he was ready to rumble.
AFP unveiled a new TV attack ad on which it will spend $1 million in North Carolina alone, Woodhouse said. It accuses President Obama of lying when he said his health-care legislation wasn't a tax. "One of the largest tax increases in American history," the ad alleges. AFP, it was clear, is out to repeat the tea-party style campaign that smeared Obama so successfully in 2010 and helped the Republicans win control of the U.S. House of Representatives.
In a way, the idea of Obamacare as a tax makes it easier for AFP and the Republican Party to attack it. Calling it a government takeover of the health-care industry was always dicey, since Obamacare left corporations firmly in charge of the health-care industry. But attacking taxes is what the right-wing lives for. It's their favorite weapon against progressive claims that a strong federal government might protect working people from the predatory practices of giant corporations.
So we circle back. In the first quarter of 2012, after-tax corporate profits in the U.S. totaled $1.67 trillion—continuing a trend that's pushed them sharply higher over the past three decades. No surprise, then, that income and wealth inequality is off the charts. Meanwhile, according to the St. Louis Fed and Business Insider, wages as a percentage of the gross domestic product have dropped steadily and are lower (at about 44 percent) than at any time since the Great Depression.
In sum, business is doing fine—it's the rest of us who aren't. And if Congress ever wants to do something about it and spread the wealth around, the Supreme Court's ruling in Obamacare could stop it cold.
This article appeared in print with the headline "Flip the bird."