March 12, 2010

Will Article III Remain Relevant?

Article III of the United States Constitution addresses the Judicial Branch of our form of government, defining the scope of, and limits to, the powers reserved for the Judiciary. For years we have heard about “activist judges legislating from the bench” as the left dragged their every losing cause before the courts, seeking to impose by judicial fiat what they could not accomplish through the ballot. Now that the left has seized power of the remaining branches of government, the courts may be the only remaining obstacle in their march toward socialist domination. Nothing makes this more clear than the events surrounding bonuses paid by companies covered in the “Wall Street” bailout.

The Obama administration and Congress are determined to push through “clawback” legislation against AIG. The legislation is targeted at those current and former employees of AIG who received bonus payments which Obama and Congress find offensive. The legislation seems to be in direct violation of the Article I Section 9 paragraph 3 which provides that: “No Bill of Attainder or ex post facto Law will be passed.”

“These clauses of the Constitution are not of the broad, general nature of the Due Process Clause, but refer to rather precise legal terms which had a meaning under English law at the time the Constitution was adopted. A bill of attainder was a legislative act that singled out one or more persons and imposed punishment on them, without benefit of trial. Such actions were regarded as odious by the framers of the Constitution because it was the traditional role of a court, judging an individual case, to impose punishment.” William H. Rehnquist, The Supreme Court, page 166.

Congress is trying to slip past that bill of attainder provision by broadening the language to encompass bonuses paid by any company receiving bailout funds. They contest that by not specifically naming AIG, the legislation does not target a limited populace and will pass Constitutional muster, a ploy that might just work. However, even the dystopia on Capitol Hill is constrained by the protections of the Fourteenth Amendment, Section 1:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

While the clear intent the legislation is punishment, Congress had to find a way around all those pesky “due process” restrictions. So they turned to that old Democrat standby, the tax code. This is not a new tactic. Their desire to redistribute wealth goes back to the post Civil War era with the federal income tax law of 1894. This first attempt at soaking the rich was struck down by the 1895 U.S. Supreme Court decision that ruled a two percent federal flat tax on incomes over $4,000 unconstitutional (Pollock v. Farmer's Loan & Trust Co., 157 U.S. 429, 15 S. Ct. 673, 39 L. Ed. 759). The Court relied on Article I Section 9 paragraph 4 of the original Constitution which stated:
“No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”

Stung by that setback, the Democratic party actually made passage of an amendment a plank in their platform for the 1896 election cycle. They succeeded in gaining passage in 1909, aided by conservatives who were caught up in an early form of “bi-partisanship”and mistakenly believed the amendment would fail in the States. In 1913, the Sixteenth Amendment was ratified giving Congress the power to lay direct taxes upon individuals. It is within the framework this creature of the Democratic party that Congress now seeks its revenge.

Yet, there are still those darned contracts which allow bonuses in the first place. There are three recognized ways to break an existing contract – declare bankruptcy, declare the other party breached the confines of the contract, or declare the contract was legally flawed from the outset. Each of these requires adjudication in a court of law. The beast in DC is not content. Now, the administration is moving for legislation to force not only AIG, but other companies, including those not taking any bailout money, to change those contracts. The in terrorem effect of these proposals being that companies will “voluntarily” re-write contracts or suffer further government intrusion on their operations.

The Obama administration and Congress are embarking on an effort to usurp the Judicial Branch by legislatively voiding legal contracts, in order to make companies comply with their ideas about how a free market should work. To the Judiciary, they are saying, “Your services are no longer required.”

Dennis P. O'Neil

Originally posted at TownHall.com on March 22, 2009

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