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Unprecedented U.S. Presidential Posturing

ElectionOracle / US Presidential Election 2012 Apr 12, 2012 - 10:09 AM GMT

By: Peter_Schiff

ElectionOracle

Best Financial Markets Analysis ArticleLast week, responding to President Obama's latest populist assault on the wealthy, I issued a commentary in which I explained why his ideas about American economic history were fundamentally flawed. As dangerous and erroneous as those views are, at least I can cut the President some slack for commenting on a subject in which he really has no basis for expertise. Hailing from academia and local community organizing, Barack Obama likely did not spend huge amounts of time boning up on economic history. However, there are other subjects where he should find firmer footing. Constitutional law certainly comes to mind. After all, Obama rose to national prominence based on his status as a legal scholar. He graduated magna ***** laude from Harvard Law School, where he was elected president of the prestigious Harvard Law Review. He went on to teach constitutional law at the University of Chicago Law School, one of the top ranked schools in the country.


Based on these achievements, it is simply stunning that he made so many fundamental errors last week in his analysis of the Supreme Court's review of his sweeping health care legislation. Not only did he make grossly inaccurate statements with regards to the health care legislation, and the history of Supreme Court decisions that relate to it, but he also showed little understanding of the very purpose that the Court serves within the constitutional framework of the U.S. government. These remarks either indicate that a Harvard degree isn't worth the paper it's written on or that there is nothing Obama won't say to advance his political agenda.

In his apparently off-the-cuff remarks he stated that "I'm confident that the Supreme Court will not take what will be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress." Before even turning to the more nuanced parts of that statement, I would ask the President what he considers to be a "strong majority?" His health care legislation (dubbed "Obamacare" by Republicans), passed the House of Representatives in March 2010 on a nearly party line vote of 220-221 (some would call this result "a squeaker.") What's more, just six months later, the slim majority that voted to pass the legislation was voted out of existence. Not only would the law stand no chance of passage in the current Congress, the majority of Americans still show misgivings about the expansion of federal power that the law involves. So much for a groundswell of national support. But that's just the appetizer.

Obama claimed that it would be "unprecedented" for the Supreme Court to overturn a law passed by Congress. Is he kidding? Every seventh or eighth grader who has taken a civics course knows that the Supreme Court acts as a check on the executive and legislative branches of government (who can often disregard the Constitution in their quests for votes and power). The intent of the framers of the constitution was affirmed in 1803 by the landmark case "Marbury v. Madison" in which Chief Justice John Marshall established the doctrine of "judicial review," whereby the Court can strike down any law that it feels to be unconstitutional. Is it possible that they never got around to that case at Harvard?

Since Marbury the Supreme Court has undone sweeping economic policies many times. Perhaps the most significant example was in 1895 when the Income Tax Act of 1894 was undone by Pollock v. Farmers Loan and Trust. By ruling that the new income tax did not conform to the taxing powers delegated in the Constitution, the Supreme Court derailed the revenue seeking agenda of the federal government. Proponents of the tax had to revert to the constitutional amendment process, a workaround that took 18 years and ultimately resulted in the 16th Amendment.

Forty years after Pollock the Supreme Court struck again when it invalidated the National Recovery Act (NRA), Franklin Roosevelt's signature piece of Depression Era legislation. The NRA was truly an "unprecedented" intrusion into the commercial lives of Americans which injected U.S. government micromanagement into almost every facet of commercial activity. It told merchants and industries how much they could charge for particular products, how much they should pay workers, how long workers could work, how employers could negotiate with unions, and established "codes of fair competition" for all business to follow.

In a unanimous decision in the 1935 Schechter Poultry Corp v. United States, the Supreme Court threw out the NRA. The Court ruled that the Act's draconian economic engineering was too broad an interpretation of the Constitution's infamous "commerce clause." After the ruling, Justice Louis Brendeis (not known for his strict adherence to conservative constitutional interpretation) famously remarked to a presidential aide, "This is the end of this business of centralization, and I want you to go back and tell the President that we're not going to let this government centralize everything." Wow, President Obama, now that's a whole lot of precedent.

What is perhaps even more shocking than Obama's ignorance on these subjects is the media's reluctance to really hold his feet to the fire. Imagine if Sarah Palin had made similarly ignorant statements during the presidential campaign of 2008. She would have been absolutely crucified in the press for her lack of understanding of the basics of federal checks and balances. But Sarah Palin would have had an excuse, she was a sports reporter, turned small town mayor, turned one-term governor of Alaska. She never taught a class in constitutional law at an elite law school.

Although subsequent statements by the President and his spokespeople have attempted to "clarify" (and soften) his originally indefensible remarks, the impression he made will be hard to erase. My hope is that his attempt to intimidate the court into upholding his law will backfire, and what is left of judicial independence will save us from Obama's impractical health care plan. If so we will have John Marshall to thank.

To save 35% on Peter Schiff's new book, The Real Crash: America's Coming Bankruptcy - How to Save Yourself and Your Country, pre-order your copy today.

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