The Secret History of the Chief Justice’s Obamacare Decision

Guest Blogger

John Fabian Witt

A Democratic Party president’s signature legislative victory is imperiled by an aging Supreme Court stocked by Republican appointees. Tricky constitutional law obstacles, including limits on the Congress’s power under the Commerce Clause, threaten to undo a vast federal insurance program designed to solve a pressing social crisis. But then one of the justices identifies an alternative way to rescue the constitutional basis for the legislation: Congress’s tax power, he concludes, offers the basis for upholding the legislation.

The scenario sounds like Chief Justice John Roberts and the Affordable Care Act known as Obamacare, which the Supreme Court upheld yesterday on the basis of the Congress’s taxing power. But it also matches perfectly the story of Justice Louis Brandeis, President Franklin Roosevelt, and the Social Security Act of 1935. And amidst all the coverage of yesterday’s decision, the crucial connection between Roberts and Brandeis has gone missing. Right out of law school, in 1979, the Chief Justice clerked for Henry Friendly, long thought of as one of the greatest judges of the twentieth century, perhaps the greatest federal judge (alongside Learned Hand) never to serve on the Supreme Court. Friendly, in turn, clerked for none other than Louis Brandeis. Brandeis’s broad view of the Congress’s taxing authority is readily apparent in Friendly’s widely respected taxation decisions. And now Brandeis’s influence is apparent in the most important opinion of Chief Justice Roberts’ tenure.
* * *

The story begins in 1933, when depression-fueled unemployment rates hit an all-time high of 25 percent. Progressive reformers, including Wisconsin’s influential husband-and-wife reformers Elizabeth and Paul Raushenbush, were desperately casting about for a constitutional basis for national unemployment insurance. Action at the state level was paralyzed because no one state seemed able to adopt an expensive insurance plan without driving employers into neighboring states. But action at the federal level seemed impossible, too, because the conservative Supreme Court seemed unlikely to allow the Congress to enact a comprehensive unemployment system as a regulation of interstate commerce.

That’s where Brandeis comes in. Elizabeth was the justice’s daughter, and when she and her husband visited with him in his summer cottage in Massachusetts, Brandeis suggested a novel solution to the constitutional dilemma: the tax power, he told them, would offer a constitutionally sound footing for the vast social insurance system they were contemplating.

Four years later, Brandeis was a decisive vote in the sharply divided 5-4 decision in Stewart Machine Co. v. Davis, upholding the unemployment insurance provisions of the Social Security Act over the dissent of the four conservative justices, who were known collectively as the “Four Horsemen of the Apocalypse.” Brandeis’s tax theory had become the foundation of the new American social insurance state.

Brandeis’s clerks generally found their boss aloof and distant. But when Henry Friendly went from Harvard Law School to clerk for Brandeis on the Supreme Court, the younger man quickly developed a case of what he frankly acknowledged as “hero worship.” The feelings were mutual. “Don’t you ever send me another man like Friendly,” Brandeis wrote in jest to Harvard Professor Felix Frankfurter: “If you do, I’ll have nothing left to do.” (See Brad Snyder’s excellent sleuthing on the Brandeis clerkship and its legacy, and also David Dorsen’s new biography of Judge Friendly.)

After his appointment to the U.S. Court of Appeals for the Second Circuit in 1959, Friendly quickly took up the project of carrying on his former boss’s vision of Congress’s taxation authority. Within just a few months of coming onto the bench, Friendly upheld a taxation measure that applied retroactively, citing in support a Brandeis dissent on which he had worked as a law clerk thirty years before (Sidney v. Commissioner, 273 F.2d 928, 932 (2nd Cir. 1960) (citing and quoting Untermyer v. Anderson, 276 U.S. 440 (1928)). And although Friendly was hardly a pushover for the government in tax cases, he adopted an approach that was distinctively aimed at avoiding formalities and allowing the government broad leeway to operate a well-functioning system tax collection.

Indeed, during the 1979-1980 term in which the future Chief Justice Roberts clerked for Friendly, the judge wrote opinions enforcing a Congressional estate tax amendment against wealthy families’ efforts to circumvent it (Alperstein v. Commissioner, 613 F.2d 1213 (2nd Cir. 1979)); upholding the government’s collection of tax penalties against a company that had entered and then emerged from bankruptcy reorganization (Jaylaw Drug, Inc. v. IRS, 621 F.2d 524 (2nd Cir. 1980)); and rejecting a taxpayer’s effort to evade the Anti-Injunction Act that Roberts took up once again in yesterday’s Affordable Care Act case (Laino v. United States, 633 F.2d 626 (2nd Cir. 1980)). Not once during the period of Roberts’s clerkship did his boss write an opinion ruling against the government in a tax case. Indeed, two years after Roberts’s clerkship ended, Friendly upheld the Congress’s tax code against a challenge to the code’s controversial marriage penalty penalizing married couples over singles (Drucker v. Commissioner, 697 F.2d 46 (2nd Cir. 1982)).

A lot changed about American conservatism and the Republican Party between Eisenhower’s nomination of Friendly in 1959 and George W. Bush’s nomination of John Roberts in 2005. But one thing that stuck with Roberts from his clerkship was a deep the same kind of admiration for Friendly that the older man had felt for Brandeis. One part of that, it has turned out, was Friendly’s old-fashioned Republican view of the federal government’s taxing authority. In 2007, he ruled in the IRS’s favor when taxpayers sought to avoid interest charges for late payment. “Bad things happen if you fail to pay federal income taxes when due,” Roberts wrote in Hinck v. United States, 550 U.S. 501 (2007). A year later, the chief justice wrote an opinion upholding the government’s efforts to collect taxes on three coal mining companies (United States v. Clintwood Elkhorn Mining Co., 553 U.S. 1 (2008)) and upheld the IRS’s view of the deductibility of certain investment costs (Knight c. Commissioner, 552 U.S. 181 (2008)). And just last year, he wrote an opinion upholding a Treasury Department regulation imposing FICA taxes on hospital residency programs for recent medical school graduates (Mayo Foundation v. United States, 131 S. Ct. 704 (2011)).

When it finally came to the Affordable Care Act, then, it should be no surprise that the chief justice had an intuitive feel for what he called the “functional approach” of the Act’s individual mandate as the equivalent of a tax makes perfect sense. Roberts’s practical evaluation of the Act seems quite plausibly to have been the result of professional training and mentoring that allowed him to draw on a long history, going back eighty years to the beginnings of a remarkable line of American jurists yoked together by relations of mentorship and professional connections.

* * *

Around the country right now, commentators are saying that Roberts’s decision reveals the gap between the Supreme Court and party politics. The chief justice has proven himself to be something more than “a movement conservative,” says the Washington Post’s Ezra Klein. Even cautious observers like Balkinization blog’s Jack Balkin are comparing him to the legendary Chief Justice John Marshall, who created the Supreme Court in the first thirty-five years of the nineteenth century. Roberts himself took time to clarify that his legal analysis was radically different from a political analysis, and that his vote did not signal support for Obamacare’s policy prescriptions. From the courtroom, Jeff Toobin reported that Roberts read his opinion from the bench with red eyes, in apparent frustration at the departure from his political beliefs that law seemed to have forced on the outcome.

And yet as the four Republican-appointed dissenters in the case make clear, the difference between constitutional law and partisanship is a razor’s edge. The story of Brandeis, Friendly, and Roberts helps us see where does this difference come from and what sustains it. Law is not a mysterious science. It does not come to us from the heavens. It is located in the professional identities of the men and women who make it.


John Fabian Witt is a law professor at Yale and a former law clerk to Judge Pierre N. Leval, who clerked for Henry Friendly. You can reach him by e-mail at john.witt at yale.edu
Posted 10:58 AM by Guest Blogger [link]