Amy Coney Barrett, the ACA, Abortion, and the Future of the Supreme Court

Two big issues that the opposition to Amy Coney Barrett's confirmation as an Associate Justice of the U.S. Supreme Court have focused on are abortion and the Affordable Care Act. With respect to the ACA, Barrett seems open to a severability argument. As I understand it (I have not researched this in depth), in the current case before the Supreme Court, those, including the Trump Administration, who want the Supreme Court to decide that the ACA is unconstitutional are arguing that the mandate to have health insurance is no longer a tax since Congress lowered the penalty to zero and hence is unconstitutional. This, they argue, means that the ACA in its entirety is unconstitutional. The doctrine of severability implies that the Court could decide that the mandate is unconstitutional but not strike down the rest of the ACA. (The Congress next year could change the law so that there is a penalty, perhaps small, which would seem to moot the case.) In the future, others could bring different cases to attack the ACA, and it is possible with Barrett on the Court that it could reverse its recent precedent on this. Of course, while I think this is not that likely, it is also possible that Barrett and four other Justices decide for some reason that severability does not apply in the current case before the Court.

Abortion has been a hot-button issue for a long time. As way of background, before Roe v. Wade, there was the 1965 case, Griswold v. Connecticut. Contraception was illegal in Connecticut, and in this case, the Supreme Court decided that married couples had a right of privacy under the Constitution and could, therefore, not be denied the use of contraceptives. (A 1972 case, Eisenstadt v. Baird, extended the right to use contraception to unmarried couples. This struck down a Massachusetts law based on the Equal Protection Clause of the 14th Amendment.) The Roe v. Wade opinion used the right of privacy argument stemming from the Griswold case to hold that laws prohibiting abortion were unconstitutional.

It is, therefore, instructive that, when asked at her confirmation hearing whether she agrees with the Court's Griswold opinion, Barrett refused to answer. She did say that it was unlikely that Griswold would be struck down, since, for that to happen, a state would have to enact a law prohibiting contraception and the challenge to that law would go to the Supreme Court. She viewed this as unlikely. (While it is unlikely that a state legislature would pass a law prohibiting all contraception, it is possible that a state could enact a law prohibiting certain types of contraception, especially those viewed by some as “abortifacients.” That would likely reach the Supreme Court.)

In contrast to Barrett, when John Roberts was asked about the Griswold case at his confirmation hearing to be Chief Justice, he answered that “there is a right to privacy protected as part of the liberty guarantee in the Due Process Clause.” He further said: "I agree with the Griswold Court’s conclusion that marital privacy extends to contraception and the availability of that."

Clarence Thomas at his confirmation hearing to be an Associate Justice also said he agreed with the Griswold decision, saying “my bottom line was that I felt that there was a right to privacy in the Constitution, and that the marital right to privacy, of course, is at the core of that.”

Samuel Alito at his confirmation hearing also affirmed that there was a right of privacy under the Constitution. He was a bit more ambiguous about Griswold: “I agree that Griswold is now, I think, understood by the Supreme Court as based on the liberty clauses of the due process clause of the Fifth Amendment and the 14th Amendment.” 

The two newest Justices would not say whether they agreed with Griswold. When asked at his confirmation hearing about Griswold, all Justice Neil Gorsuch would say is that it was long-established precedent. He would not answer whether he agreed with the decision.  Justice Brett Kavanaugh also refused to say whether he agreed with the reasoning of the Griswold decision in his confirmation hearing.

Given that Roe v. Wade relies on Griswold and that there seems to be some Justices who do not believe that the Constitution grants a right of privacy, it is not that hard to see it being reversed at some point in the future.

However, sometimes lost in the discussion of Roe v. Wade is a discussion of the Planned Parenthood v. Casey decision (1992), which modified Roe v. Wade by applying on state restrictions on abortion "an undue burden" test. In subsequent decisions, the Supreme Court has found that many state laws applicable to abortion clinics do not pose an "undue burden" on women who want to have an abortion. As a result, many women of limited means find it nearly impossible to obtain an abortion in some states. (Other states, such as Virginia, have relaxed in recent years the laws applicable to abortion.) In other words, while the Court has claimed that the central holding of Roe v. Wade has been affirmed, how much access there is to abortion as a practical matter remains to a great degree up to state governments.

As a self-defined “originalist,” Barrett most likely disagrees with the right of privacy justification in Griswold for striking down the contraception law in Connecticut. Moreover, one can say with a great deal of certainty that she believes that Roe v. Wade was wrongly decided. The real question is what she thinks of the Casey decision, which relies heavily on the doctrine of stare decisis to uphold a woman’s right to terminate a pregnancy prior to the point of viability. Casey, though, does jettison the trimester approach in Roe and explicitly allows for state rules governing abortion unless they impose an “undue burden” on a woman’s right to obtain an abortion.

The authors of the governing decision in Casey – Justices Sandra Day O’Connor, Anthony Kennedy, and David Souter  – spend quite a few words worrying about the Court’s perceived legitimacy if it did not adhere to stare decisis with respect to Roe. They do say that there are times when a decision is so egregious that it must be overturned. They mention specifically Lochner v. New York and Plessy v. Ferguson. Lochner struck down a New York State law limiting bakers to work at most 60 hours a week and Plessy v. Ferguson decided that racial segregation laws were constitutional for facilities that were “separate but equal.” With respect to Roe, the Justices writing the controlling opinion in Casey wrote: “In contrast, because neither the factual underpinnings of Roe’s central holding nor this Court’s understanding of it has changed (and because no other indication of weakened precedent has been shown), the Court could not pretend to be reexamining Roe with any justification beyond a present doctrinal disposition to come out differently from the Roe Court. That is an inadequate basis for overruling a prior case.”

It is not clear what Barrett thinks of this argument, and, if she disagrees, how far she is willing to go in limiting the legal right of women to terminate pregnancies. It is also not clear how far four other Justices are willing to go, now that the “conservatives” (assuming Barrett is confirmed) will have a clear majority and their decisions will have real-word effects. At a minimum, it is likely that Roe will continue to be whittled down by burdens that the Court decides are not “undue.” Whether they go further than that is uncertain. They know that public sentiment is not on their side.

Making abortion illegal would not eliminate it. There will always be women who will seek abortions, no matter how easily available various types of contraception are. If it is illegal, there will be illegal and, in many cases, unsafe abortions. That is not an optimum policy result.

While the most likely result is a patchwork of different laws among the states concerning abortion, according to Laurence Tribe, Congress could make it illegal everywhere if Roe were overturned. I doubt that would happen, given public opinion on the subject, but it is worth keeping in mind. Also, Tribe points out in a 2018 tweet, that Roe “is a 2-sided coin. It protects a woman’s liberty to choose *whether or not* to bear a child. Relegating that choice to the state isn’t a PRO-LIFE move but an ANTI-LIBERTY move. If a state can say ‘stay pregnant!’ it can also say ‘abort!’” Again, that is unlikely but possible.

The concentration on the ACA and abortion partially eclipses other matters that come before the Court. With Barrett on the Court, one can easily see the dismantling of many regulations that business interests view as "undue burdens," such as those protecting the environment and worker safety. Also, there could well be decisions allowing more voter suppression than is currently the case.

Barrett argues that the originalist approach to the Constitution is one of judicial modesty. She says that the elected branches should make policy, not unelected Justices. However, if the Supreme Court interprets the Constitution as limiting severely what legislation is permissible, the Court will be in the policymaking business, as it was when it was striking down New Deal legislation, leading President Franklin Roosevelt to propose a complicated court-packing scheme. While that proposal was and is viewed by most unfavorably, there is an argument that it worked, since two Justices subsequently started voting with the liberals then on the Court. “A switch in time saved nine.”

Book Review: The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy

Modern monetary theory (MMT) is controversial. It upsets deficit hawks because it claims that the limits on running a budget deficit for a government that is a “currency issuer” (unlike state governments or members of the Eurozone) are the productive capacity of the economy and inflation. A currency issuer can always make good on debt that is denominated and paid in its own currency. Also, it upsets most mainstream economists with its argument that fiscal policy, rather than monetary policy, should be the main instrument that should be used by governments that are currency issuers to steer the economy to full employment and low inflation.

Stephanie Kelton’s new book, The Deficit Myth, aims to convince interested persons in the correctness of these ideas. It can be easily read by non-economists, but the simplification of the argument does not help it to be persuasive.  

The book is at its best when discussing the budget deficit of a currency issuer government. She argues persuasively that analogies to corporations or household budgets are not appropriate.1 Many economists would agree with this, though most would be concerned about the budget deficit when the economy is doing well. Kelton would respond to that criticism by pointing out that the government should not run budget deficits when inflation starts appearing. In the current circumstances, most economists would agree that the large budget deficits of the federal government are necessary.

However, the book is a disappointment. With regard to budget deficits, Kelton does not acknowledge that at some point there could be a lack of confidence in a particular currency, justified or not, which could affect the foreign exchange market and force the government to change its policies.

The most grievous flaw in the book is the brushing aside of institutional detail. The author asserts that the government just issues newly created money to pay its bills and then replaces some of that money with government securities. In the U.S. that is not quite how it works under the current institutional arrangements. The Treasury maintains in effect a checking account at the Federal Reserve. Treasury staff make projections for the months ahead of the amounts of cash that will come into that account and will go out of that account on a daily basis. Then Treasury decides the timing and quantity of its security issuance so that its balance does not go negative. Treasury is prohibited from borrowing directly from the Fed, but an inadvertent one-day overdraft is permitted. 

Also, Kelton seems to argue that the government is the sole source of money creation. However, the Federal Reserve controls the monetary base, but it is the banking system that creates money by taking in deposits and lending it out. The ratio of the supply of money (M1 or M2) and the bank reserves that the Fed creates is not constant.2

Another monetary issue that Kelton ignores is the velocity of money, which is the ratio of the GDP to the money supply. That is also not constant.3 

MMT proponents do not provide a convincing explanation of the combination of inflation and a bad economy in the 1970s (“stagflation”). They are not alone in not explaining convincingly why this happened, but, since their core argument is that deficit spending is only limited by the productive capacity of the economy and inflation, they need to address it.

Finally, with regard to fiscal and monetary policy, Kelton ignores that the Fed can act very quickly, but Congress cannot. And even when Congress passes appropriation legislation that the President signs, it takes some time for the spending to take place. 

The argument that the central bank should be made a bit player and all the action should be concentrated in fiscal policy is not convincing. Kelton surely knows of the issues I have mentioned here, but to simplify her argument she ignores them. If she writes another book, she should address these types of issues and be more explicit about what she is advocating and why she thinks it is practical and feasible, both technically and politically.

The book also addresses Social Security, and I mostly agree with her discussion of this. From an economic perspective, it does not really matter whether benefits are paid from the general fund or the Social Security trust fund, though it matters politically. In this regard, the argument is made by conservatives and others that we should not let the trust funds run down enough that money from the general fund is necessary to make sure that benefits are not cut. This, they say, would make the program subject to politics. This is ridiculous on its face, since Social Security benefits are already subject to politics, as they amply demonstrate by making the argument that future benefits should be cut. They argue that we need to cut future Social Security benefits now in order “to protect” Social Security. From what?  Politics?   

In another chapter, Kelton argues that the federal government should act as an employer of last resort when the economy is doing badly. The attractiveness of this idea is clear, and to an extent during the Depression, entities such as the Civilian Conservation Corps were set up to provide employment when there were no private sector jobs to be had. However, Kelton underestimates the enormous practical challenges of setting up and administering an agency or agencies that would employ people when the unemployment rate was high. For the idea to be taken seriously, more thought needs to be given about how this would work and what type of jobs would be offered. For example, let’s say that the demand for aerospace engineers collapsed. What would the government employ them to do?

Currently, the U.S. government is conducting a giant economic experiment. It has been spending without regard to the budget deficit, at least until recently when Congress is having difficulty passing legislation to spend more money to help the economy. The Fed has essentially monetized the deficit. While Treasury cannot borrow directly from the Fed, the Fed has been buying up Treasury securities in large amounts in the market, thus replacing Treasury securities with bank reserves. The adherents to MMT and most economists think this is necessary in the situation we find ourselves in. In fact, the well-respected journalist, Sebastian Mallaby, who generally holds more traditional economic views than that of MMT, calls this “the age of magic money.”

In a way then, MMT is being tested, but there may be a return to more traditional ways of thinking once the current crisis is over. MMT cannot be as easily dismissed as Larry Summers tried to do in a March 2019 article for the Washington Post (“The left’s embrace of modern monetary theory is a recipe for disaster”). But it needs more work, and they will have to get into the details of how the monetary system works and how they would reform it in order not to be dismissed as a fringe group, in the manner Art Laffer’s version of supply-side economics is viewed.

Endnotes:

1. In this regard, President Obama was wrong when he said that the government needed to tighten its belt just as families were doing. Precisely the opposite is necessary when the economy is doing poorly.

2. This incidentally is a problem with the monetarism associated with Milton Friedman, which often implicitly assumed that it is constant. 

3. Again, the monetarists usually assumed that velocity was relatively constant and that the central bank only had to worry about the amount of reserves it created. Friedman, only half-jokingly, said that we did not need an open market committee at the Fed, a computer could be programed to do this.

Comments on 2020 Presidential Politics

Because the Iowa caucuses and the New Hampshire primaries are the first contests for the Democratic and Republican parties’ nomination process, they receive outsized attention by the candidates and the news media. In fact, few delegates are at stake, but they provide a test of the candidates’ retail politics abilities and do not provide insurmountable financial barriers that the larger states often present. Despite the cold weather, reporters seem to enjoy covering these events, and defend them for the seriousness that the voters of these states consider their choices. As has been pointed out, though, the demographics of both states do not reflect the country at large, and the population of both states is largely white. Many question the role that these two states play in choosing the next President of the United States.

With no real contest taking place among the Republicans this year, the focus has been on the Democrats. Before the New Hampshire primary, four significant Democratic contenders,  Beto O'Rourke,  Kamala Harris, Cory Booker, and Julián Castro dropped out of the race. All four were attractive candidates and three are non-white. However, their polling numbers, financial difficulties, and, in the case of Kamala Harris, campaign management problems caused their departures, not the first two electoral contests. After New Hampshire, Andrew Yang dropped out.

More significant this year was the next primary, South Carolina. Arguably, the makeup of the Democratic Party in that state is also not representative of all Democrats. Approximately 60 percent of the Democratic electorate in that state is African-American. The South Carolina primary served to resurrect the candidacy of Joe Biden, whom many had written off, and propelled him to victory in many states on Super Tuesday.

This is a strange way to choose the Democratic nominee. Unless some development totally collapses Trump’s candidacy, he will almost certainly win South Carolina’s electoral votes in November. The Democrats in that state though appear to have had the largest voice in picking the Democratic nominee. It is still possible for Bernie Sanders to win the nomination, especially after his performance in California, but as of now, the odds favor Biden. The reason that they do is the results of the South Carolina primary.

As far as the general election goes, Trump will have the support of an enthusiastic base, but he needs more than that to win. If Sanders were to win the Democratic nomination, he would have an enthusiastic base, but many in the center would not vote for him. They also might not vote for Trump in large numbers. If Biden were to win, he would not have an enthusiastic base supporting him, but he would have the votes of all who dislike Trump, which is sizeable. The betting of the Democratic establishment and primary voters is that Biden has the best chance to beat Trump.

Trump would probably prefer to run against Sanders, whom the Republicans would portray as a dangerous socialist and point to communist regimes as illustrating the danger. This would be unfair to his positions and what he could conceivably get enacted by Congress, but it could work. With Biden, the Republicans are going to point to his gaffes and hint that age has taken a sufficient toll on Biden that he should not be President. It is not clear that strategy will work.

Democrats need to more forcefully discuss Trump’s unsavory business history than did Hillary Clinton’s overly confident campaign. They also need to criticize his record as President, including the inhumane treatment of people trying to enter the country, tax policies slanted to the rich, attempts to repeal the ACA, a muddled foreign policy, disastrous environmental policies, and arguably illegal uses of his office to further his political and financial interests.

It will be a dirty and hard-fought campaign.