June 30, 2012
The Secret History of the Chief Justice’s Obamacare Decision
John Fabian Witt in Balkinization:
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.
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