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Jan. 7 2010 - 1:39 pm | 316 views | 1 recommendation | 17 comments

Cornhusker Compromise Constitutional

WASHINGTON - DECEMBER 08:  U.S. Sen. Ben Nelso...

Image by Getty Images via Daylife

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?


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  1. collapse expand

    These crooks in congress will be taken back outside the woodshed…. and be given a good beating…. and what happens when we all go to jail for not buying health care… and what happens to the jail themselves… and why is the sky blue, and not red??….It’s all clearly a conspiracy from the liberls….

    (Just wanted to beat Andylevinson to the punch)

    :)
    Have a great day Rick!

  2. collapse expand

    I wouldn’t be so fast to rule out the Equal Protection Clause as a route the Supreme Court might take to pull the rug out from under Nebraska deal. The thrust of the Clause has been to stop Congress from providing benefits to favored classes or harsher punishment to disfavored ones. In essence, the rules must treat people alike if the distinction is based on a rather narrow set of factors. Race is the most forbidden method of distinction and gets the most strict of scrutinies. Religion, national origin, and sex all have varying degrees of scrutiny. The Court may well and rightful decide Congress cannot create national benefit that favors those from particular states. I doubt Congress could pass a tax law that exempted those from Nebraska, nor could it provide national medical care to all citizens, except those from Alaska. I doubt Congress could fashion a draft the compelled all citizens to serve except those from Nebraska. One of the main reasons the current Constitution was created as it is was to prevent the large states from grabbing all the resources. Hence, the make up of the Senate. Originally, all taxes had to be proportional to population. Congress did not nakedly name Nebraska as exempt from the Medicare payments, it developed a formula that only benefits Nebraska, but given the legislative history, I am not sure that fig leaf will be sufficient protection.

    Given the rather extreme makeup of the current Supreme Court, i could well see them using the Equal Protection clause to prohibit such blatant favoritism of a particular state’s population.

    • collapse expand

      Maybe – but extremely unlikely for a wide variety of reasons. If the Court were to use Equal Protection to strike this down, that would set a precedent prohibiting Congress from passing any state-specific legislation. That would be untenable as there is a great deal of state-specific legislation.
      I think that if the situation were such where 49 states were taken off the hook for their Medicaid share and 1 state was forced to continue paying it, this would make for a much better Equal Protection case. But where Congress, acting more than likely in the purview of its legislative authority, passes a state-specific provision, I seriously doubt the Court would strike it down.

      In response to another comment. See in context »
  3. collapse expand

    Well everyone can line up for Deal or No Deal again when the final vote comes up…the Governator will be cheering on Boxer and Feinstein for no co-payments and to pay for all our prisons and to make up for Enron free electricity for a couple of years and hey how about a tax holiday and cherry cokes and a movie for everyone over 60.

  4. collapse expand

    A lot of stupid things are Constitutional

  5. collapse expand

    “I think that if the situation were such where 49 states were taken off the hook for their Medicaid share and 1 state was forced to continue paying it, this would make for a much better Equal Protection case. But where Congress, acting more than likely in the purview of its legislative authority, passes a state-specific provision, I seriously doubt the Court would strike it down.”

    Rick, I really don’t see the difference between what you’ve written here and what we have in this Nebraska situation. Assuming that the state in your scenario doesn’t get the exemption because its senator refused to vote for the deal, it still boils down to deal making as opposed to governing. Don’t you think the Court could just define “state-specific provisions” as provisions which address state-specific problems, and thus distinguish them from things like this overt deal-making state-specific exemption?

    • collapse expand

      I don’t. This is not what the Court does. The issue that would come before the court would have to speak to Congress’ ability, under the grants in the Constitution, to legislate state specific legislation. The court would not be in a position to say that they don’t like that the Nebraska deal was the result of a ‘deal’ with Sen. Nelson, therefore its unconstitutional. The Constitution, and the rulings on the relevant clause, don’t say that the Congress can legislate in this manner except when it occurs as a part of deal that offends the public and/or the Court. As I say in the post, this requires a political solution – not a Court solution.

      In response to another comment. See in context »
  6. collapse expand

    Rick,

    I lost the thread and due to a third martini, (how did Nick and Nora do it?), I thought or imagined that the mandate was in discussion as it was at my dinner party. Forgive my occasional delusions.

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    I am an attorney in Southern California, and a frequent writer, speaker and consultant on health care policy and politics. To that end, I am active member of the Association of Health Care Journalists. Based in beautiful Santa Monica, California, I'm very pleased to have the opportunity to be a contributing editor to True/Slant. I've recently finished a book designed to make the health care debate understandable to the average reader, and expect it to be out in the next five months or earlier. In my 'spare time', I continue to write for television and, occasionally, for comic books.

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