Cornhusker Compromise Constitutional
Desperate to deliver the 60 votes necessary to block a filibuster and save the health care reform bill in the Senate, Majority Leader Harry Reid cut a deal with Senator Ben Nelson (D-Neb.) that has come to be known as “cash for cloture” or the “Cornhusker Compromise”.
In exchange for Nelson’s vote, the State of Nebraska was offered permanent relief from having to pay their share of Medicaid, the safety- net health system for the poor.
Generally speaking, Medicaid is structured as a partnership between the federal government and the state governments. If a state agrees to follow the guidelines presented by the federal government, the feds pay roughly half of the costs of operating the Medicaid program in each state, the remainder being paid by the state.
The Nelson deal, which exempts Nebraska from ever having to pay their half of the Medicaid costs again, means that the rest of us will be picking up the tab for the state through our federal taxes. Further, Nebraska is being given a meaningful benefit that is not being offered to the other 49 states in the union.
How can this possibly be legal?
According to the 13 state’s Attorneys General – all Republicans – it isn’t. In fact, they believe the deal is unconstitutional as hell.
However, current law just might indicate otherwise.
Article I, Section 8, Clause 1 of the United States Constitution reads –
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
The last two clauses are known as the General Welfare Clause and the Uniformity Clause. These are the provisions that promise to be at the heart of any constitutional attack on the Cornhusker controversy.
While many feel that there is an inherent ‘unfairness’ in Congress granting so significant a benefit to one state while denying the same to all the others, the Court has held that the power of Congress to determine what is done in the name of the general welfare of the nation is an extremely broad power. Indeed, many would say it is almost limitless.
The Court established this precedent in the 1937 landmark case, Helvering v. Davis, and things haven’t changed much since then.
From Helvering –
Congress may spend money in aid of the “general welfare.” . . . There have been great statesmen in our history who have stood for other views. We will not resurrect the contest. It is now settled by decision. United States v. Butler. . . . The conception of the spending power advocated by Hamilton and strongly reinforced by Story has prevailed over that of Madison, which has not been lacking in adherents. Yet difficulties are left when the power is conceded. The line must still be drawn between one welfare and another, between particular and general. Where this shall be placed cannot be known through a formula in advance of the event. There is a middle ground, or certainly a penumbra, in which discretion is at large. The discretion, however, is not confided to the courts. The discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power, not an exercise of judgment. (emphasis added) This is now familiar law.
Via Constitutional Law Prof Blog
Picking up on the last sentence of the passage from Helvering noted above, did Congress act in an ‘arbitrary’ way in making the deal with Nelson?
Highly unlikely. The standard applied to Congress in determining what is arbitrary and what is not is extremely low, meaning Congress doesn’t have to show much to get around a decision being deemed arbitrary. There are many pieces of legislation, on any number of issues, containing state-specific provisions. They have never been deemed by the Court to be arbitrary so it is unlikely that this would happen now.
That brings us to the Uniformity Clause.
If you read the Uniformity Clause carefully, you will note that it applies to federal taxes (duties, imposts and excises) not federal spending. Clearly, the Nebraska deal is about spending – not taxing. The Congress has decided to spend our money to pay for all of Nebraska’s Medicaid program so that the citizens of Nebraska do not have to do so.
According to often cited law professor Timothy Jost, a health law specialist at Washington & Lee Law School, “There’s no equivalent requirement that spending has to be uniform among the states — and of course it isn’t, it has never been, and never will be.”
Very good chance he’s right. Otherwise, every earmark that has ever made it through Congress, each designed to benefit a particular state or even Congressional District while offering no uniform benefit to other states, would be deemed unconstitutional. And while striking down Congressional earmarks as unconstitutional might not be such a bad thing, it isn’t likely to happen.
One final note – many believe that the Equal Protection Clause of the Constitution prohibits the Nelson deal because the states are not being treated equally.
This is an incorrect interpretation of the Constitution. The Equal Protection Clause applies to individuals – not states. The Constitution creates no requirement that the federal government treat all states equally in every circumstance.
Bottom line on ‘cash for cloture’?
While many on both sides of the political aisle find this deal to be unseemly and wrong, it is likely to survive constitutional scrutiny. If you are unhappy with this, your best chance will be to pursue a political solution as the Supreme Court is probably not going to take care of this for you.
Next up: Can Congress and the Administration order the states to set up and opeate the health care exchanges?