The New Civil Liberties Movement
2021-10-18 · Guest: Philip Hamburger (Columbia Law School Professor) · 52:29
Government coercion and the surrender of constitutional rights
In this episode, host Bob Zadek interviews Professor Philip Hamburger about the expansion of administrative power and the legal strategies used to challenge it. They focus on the mission of the New Civil Liberties Alliance and the themes of Hamburger’s book regarding how the government uses financial conditions to bypass constitutional protections.
Topics: Administrative State, New Civil Liberties Alliance (NCLA), Constitutional Law, Purchasing Submission, SEC, Due Process Speakers: Bob Zadek (Host), Philip Hamburger (Guest)
The New Civil Liberties Alliance [00:00]
Bob Zadek: Good morning, everyone. Welcome to the Bob Zadek Show, the longest-running live libertarian talk radio show on all of radio, and one of the very few shows that continued to be live and spontaneous; and therefore, I lack control over the content. You will hear it spontaneously. You will hear the content at the very moment that I do. Thank you so much for listening this Sunday morning.
I’m happy this morning to welcome back to the show Philip Hamburger. Philip is a law professor at Columbia Law School; he has been there for about 15 years and counting. And he is also the author of a great number of books. He seems to write as many books as I do radio shows, and I do shows every week. He is a prolific writer, and he has written extensively and with great authority on the subject of the administrative state—the fourth branch of government.
Philip has written a book a while ago, and he was a guest on my show shortly after it was published, questioning whether the administrative state was in total unconstitutional. It is a fascinating read, as relevant today as it was when it was written. Philip has written a new book which really got me thinking, and I was off on a tear upon examining the various premises of Philip’s book. Philip’s book is entitled Purchasing Submission: Conditions, Power, and Freedom. And in this book, Philip examines in great detail, with a great number of examples, the use of the administrative state to, in effect, coerce individuals and entities and other branches of government, coercing them into surrendering otherwise constitutionally protected rights.
We have a federal government which purchases—but even that is perhaps a charitable phrase, a charitable verb—purchases the surrender of constitutional rights. I guess there ought to be an exclamation point at the end of that sentence, so I ask you to stipulate one. How does the government coerce you, persuade you, or purchase from you your constitutional rights? I thought you’d never ask. And Philip is on the show this morning to answer that question.
Philip, thank you so much for joining us this morning. And Philip, before you take over, I’d like to just mention to our audience once again that you are the founder of an organization called the New Civil Liberties Alliance, which is a non-profit public interest law firm based in Washington, D.C., which protects constitutional rights from infringement by the administrative state. So before we roll up our sleeves and discuss how the government purchases your waiver of your constitutional rights—a fascinating subject—please tell us just a bit about the New Civil Liberties Alliance.
Philip Hamburger: Well, thank you so much, and it’s great to be back with you here on the show. The New Civil Liberties Alliance was something I founded about four years ago because I was dissatisfied with the way that conservative and libertarian organizations were litigating to protect our freedom. I thought it could be done better. And the organization is—it’s actually somewhat like the ACLU, only we actually try to defend your civil liberties. We have about 20 people in Washington, D.C., and we have many, many cases, and we’ve already had a lot of good successes in pushing back against the administrative state.
The theory on which the organization is founded is that administrative power is the greatest threat to our civil liberties in our era, and it’s therefore necessary to focus on that and push back. Shall I just give you one example of litigation and then we can turn to conditions?
Bob Zadek: I’d love you to, Phil.
Philip Hamburger: Because we’re going to have COVID litigation and we’re doing conditions litigation, but before, I just want to give you an example of the sort of thing we do. We want to do strategic litigation to push back on the types of power that agencies have over us. And one of them happens to be the Securities and Exchange Commission. The Securities and Exchange Commission goes after people who do insider trading. Now, we think people should not be engaged in insider trading. We’re not against regulating that. But they do it without—not just by an act of Congress, but with their own rules that they invent and are not law. And they prosecute people in their own little non-courts run by so-called administrative law judges who aren’t really judges, who don’t give you a jury, who don’t give you due process of law, and are quite biased.
So we’ve been litigating against these, and we believe that these little tribunals and ALJs are unconstitutional, and we’ve done so well in litigating that the Securities and Exchange Commission has now largely given up bringing its cases in front of the ALJs. We’re forcing them to go into district court where they should be. But then this summer in district court, of course, they’re not satisfied simply to prosecute you under law. They want to use the Justice Department to go after you for violating mere guidance, which isn’t even an interpretation; it’s just their view of the law. It’s not even a rule.
And I’m delighted to say the judge in Spartan Securities v. SEC instructed the jury that guidance is not binding as law—not binding. And the jury acquitted our client on 13 out of 14 charges. The 14th one was small potatoes. And what that means is we’ve chased the SEC out of their unconstitutional little administrative tribunals into district court, and the SEC can’t win in district court. So this is good news. It’s part of a larger strategy to take down these administrative tribunals that are utterly unconstitutional. So that’s what the New Civil Liberties Alliance does, and if anyone’s interested, look at our webpage, NCLA.legal. We have a new movement in favor of civil liberties, and I hope it will succeed.
Purchasing Submission and Constitutional Waivers [05:30]
Bob Zadek: And “civil liberties” is almost, if you will, in my opinion, too bland a phrase. You are protecting constitutionally granted rights. We had that before the Constitution. And the right to bear arms—we had that before the Constitution. And the Constitution merely respects those rights. These are not merely granted, but they’re constitutionally acknowledged.
Philip Hamburger: But I—yes, I agree with you entirely. We should—one could have just called this a movement to defend constitutional freedoms.
Bob Zadek: Exactly. Phil, I was just making a point to induce people to get out their credit cards and checkbooks, and you corrected me. Oh my goodness. You don’t know anything about fundraising, Phil. I’ll tell you that.
Okay, so let’s roll up our sleeves and let’s get down to the business at hand: Purchasing Submission: Conditions, Power, and Freedom. Now, you mentioned in your book, and it has been mentioned by others in commenting on your book, that this subject—it is totally accurate to give as a bullet point describing one of the principles of your book—is that the federal government either purchases or persuades individuals and entities to waive constitutional rights. Now, I know that’s accurate, and that’s not too broad, but to bring us into the subject, start with that premise. Is it accurate to say that the federal government, in the subject matter of your book, is merely purchasing or otherwise coercing entities and individuals to waive or surrender constitutionally granted rights? Let’s start with that, and let’s see the tools the government uses to either purchase—a charitable word—or coerce individuals to surrender constitutional rights.
Philip Hamburger: Thank you. Yes, I’m afraid that is what happens. The Constitution gives the federal government the power to enact laws, and those laws are limited, at least to some degree, by our rights. But it’s not content with that. And so it created an alternative pathway to control us, which was administrative edicts where they command you. And the administrative rules look like congressional rules, but they just come from an agent, from an agency, not from people we elect.
And then they’re not even satisfied with that. They have another irregular mode of controlling us, which is through conditions. They distribute money or other privileges to us. For example, we give money to the states; they give us money for education and the like, and then they say, “Oh, and by the way, you only get this money if…” and then they list a series of conditions. And those conditions they can use to regulate us, which is unconstitutional, and even more unconstitutional, they can use the money then to say, “Subject to condition, you give up some of your speech rights. You give up some of your due process rights, or you give up your jury right.”
Would you like a summary of the next segment of the episode?
The Two-Step Process of Conditional Governance [10:49]
Bob Zadek: Um, they—they use these conditions to basically, essentially, they’re using our tax money to buy our constitutional freedom. And this is scandalous. You said, Philip, you said something really, in my opinion, so with great insight, and I want to restate it just to be sure that our audience didn’t let this important point you made slip away.
The government undertakes a two-step process. Step one: they deprive you of rights or property you otherwise would have. Think of taxation. Before the taxes are imposed, your property is your own. Step one: let’s take away your property by taxation. I’m not saying it’s criminal, it’s theft, but some people argue that. But the government takes away some of your money only to give it right back to you, but with conditions. Uh, the same with licensing, as we will get into. First, the government says, “Okay, step one: you cannot do something. You cannot open a business. You cannot.” Step two: “But we will give you the right to open the very—the business we a second ago deprived you of. We will give you that right, but on the following conditions.”
Notice the word “conditions,” but it’s a two-step process which you will see in all of Philip’s and all—uh, uh—examples. Step one: take away rights or property. Step two: give it back conditionally. Okay, I—Philip, that was an important point. I just wanted to be sure it was not lost on our audience. So please continue.
Philip Hamburger: Yeah, no, thank you. That—that’s actually, I think, one of the reasons this mode of governance has not received enough attention, because it’s is a little complicated. It’s not just an agency unlawfully telling you, you know, “Wear a mask, take a vaccine, you know, stand on your head, tear your hair out.” Um, instead they’re saying, “Oh, here’s a present. It’s yours.” And you say, “Thank you. Oh, good, I’m glad to have free money.” Um, although it’s not really free, as you pointed out. Um, but then they say, “But we just want you to do something uh in the process. We just want to make sure you don’t do this or don’t do that.” And in that way, they regulate you without an act of Congress, and they deprive you of your rights. Um, so uh, can I give an example? This is actually how I got into this.
Bob Zadek: Please. Um, and Philip, also be sure to mention the—uh, the example you use in your book, which is South Dakota v. Dole, because it’s such a clear example of how we got here.
Philip Hamburger: Good. Good. Let’s—let’s start with that one then. Um, so uh, the federal government uh subsidizes highway construction now by the states. And now, whether or not that’s constitutional is something we can talk about later. The mere spending may be also unconstitutional, but leave that aside for a minute. They give money to a state such as South Dakota and say, “Oh, and by the way, uh, you can have this money, but uh, you have to have a law uh dictating a national uh drinking age, and it’s going to be 18, not 21.”
Um, and the states, most of the states say, “Okay, we’ll change our regular—we’ll change our laws in order to get this money.” Now we’ve already violated all sorts of elements of the Constitution. Um, but again, leave that aside. What’s interesting here is that they’re giving money to the states in exchange for their changing their drinking ages. Now, this is simply not within the constitutional power of the United States. Uh, there is no general spending power, and it’s not clear that this spending is within the commerce power. Uh, the general welfare limitation on spending means that spending cannot go to the states. That’s been thrown away too. And then there’s commandeering here. The federal government is using its money to dictate to the states what their policy should be.
Now, if you—that’s the most basic example. The Supreme Court says, “Oh, that’s just fine.” Um, but unfortunately it gets worse because then in many instances, the federal government will say, “We’re giving you this money, and by the way, we want you to limit the speech rights of your personnel.” And that’s what happens in universities, and that’s how I got into this.
I was in the living room of a friend, um, a brilliant friend, and I asked him, “Why haven’t you published an article you wrote?” He’s a great statistician. And he said, “Oh, I can’t publish it.” I said, “Well, you mean you can’t publish it?” He said, “I did not get prior permission from the Institutional Review Board, so-called IRB, and I therefore can’t publish.” “What do you mean? I thought we don’t have censorship in this country.” And I said—and he said, “Oh, yes. If I publish it, they’ll prevent me from publishing in the future, so I can’t publish it.” So he circulated his important paper in samizdat, as if it were Russia.
And that’s how I got into this. I started studying these Institutional Review Boards. And what happens is HHS, Health and Human Services, gives research funding to universities on the condition that they have little censorship boards. And in order to do research on so-called human subjects, which includes, by the way, talking to you. If I’m going to write about this, I have to get prior permission for each part of the conversation. And I’m not allowed to publish your name or some of the details, lest it embarrass you. Can you imagine?
So all research on human subjects, which is most research, is now subject to prior censorship for the speech in the research and later publication. And it turns out this has a death toll associated with it. It’s meant to protect the human subjects, but in fact, because you’re suppressing medical inquiry, um, it actually kills hundreds of thousands of people because you’re depriving them of medical knowledge. It’s frightening.
Purchasing Submission and the “Sugar Daddy” Government [17:15]
Bob Zadek: So what we have is a—a cherished, a cherished right, a right that uh distinguishes us from any um Western democracy. Free speech. We have the most protected speech rights of any country on the planet. That cherished right that—that most of us would say you can’t—the government cannot interfere with that right. It is truly uh cherished. We have the government in a way that’s as stealthy as prohibitions can be, in effect, regulates in a very profound way what a scholar or anybody else can publish. Prior restraint. It’s not quite prior restraint, except if you do it once, you can’t ever do it again. I think you’re right. It is prior restraint. This is prior licensing of speech. And you’re—and it—it—it’s—and I think you’re right to use the word “stealthy.” This is a stealthy assault on free speech, which they could never have done directly. But you do it with money, and somehow they think it’s legal.
Philip Hamburger: That’s right.
Bob Zadek: And once again, it starts with the fact—it starts with the fact that government, in the first instance, um, in this case, uses tax dollars uh in the form of grants which it gives to universities. We know that the federal government virtually is the sugar daddy of most uh universities in this country. It dispenses lots and lots of money, and it does so, as we have said earlier in the show, conditionally. So it starts with the money.
Now, the federal government doesn’t earn money; it gets money only by taking it from taxpayers—taxpayers, people who pay taxes. So, first, the government takes away money from taxpayers, and it uses the money which it obtained through taxation—it doesn’t use it for the common defense, it doesn’t use it for the common good, it uses it to coerce the surrendering of constitutional rights. So it takes money from us with us getting no benefit, only so that the government can then have the power to coerce.
So Philip’s book title, Purchasing Submission—as I jokingly said to—to Philip before we started the show, he gives the government too much credit. “Purchasing” sounds like willing buyer, willing seller. “Let’s do a deal.” The government takes away your money and then gives it—gives your money back, you being—taxpayers as a group, but only on conditions. Without the money that it took, it cannot have the power. So that’s the source of the—of the power that the government has.
Now, Philip, the government’s purchasing—your word—coercing or taking away—my word—comes about in so many different areas that the listeners are generally familiar with, but not in this connection. So walk us through some of the many examples in your book where the government uses the power by, on the one hand, taking away rights or property and then giving it back conditionally. You mentioned a whole bunch of examples in your book. Give us a few uh which our listeners are generally familiar with, but not in this context.
Philip Hamburger: Sure. So I—I—I think Title IX is a good example. We all know that Title IX uh bars uh sex discrimination in educational institutions. And—but what’s not really real—and that it’s been misused through interpretation or guidance from the Department of Education to actually suppress sexual and political speech in nasty little inquisitorial tribunals. But what’s not generally understood is this is not a general prohibition in Title IX.
Philip Hamburger: Title IX is a federal law which actually says if you get educational spending from the federal government, you, the educational institution, have to start censoring the speech—uh, have to stop discrimination, including censoring speech, according to the interpretation. Um, so in other words, money is used. And that’s not an accident because it’s rather dubious whether the federal government has any, uh, congressional power over education. It surely does not. Uh, and that’s largely undisputed. And so Title IX reflected that, uh, sort of acknowledged there was no federal power of education, so they thought, “We’ll use money to control it.” And that’s typical. Uh, money is used to control things that otherwise are outside the constitutional ambit of the federal government.
The Power of the Purse and Conditional Rights [21:25]
Philip Hamburger: Uh, we gave the example of the drinking laws. We now have federal drinking regulation imposed by the states, which has simply been purchased by them. Um, it happens in education also in controlling the speech through IRBs, as I mentioned. Another example is the so-called Hatch Act. The Hatch Act says to federal employees, “You got a job from us, well, you can’t engage in political campaigns.” Now that’s probably wholesome in some sense, but to limit the speech of individuals outside the course of their work is—is probably unconstitutional. Um, um, their freedom of speech.
Um, another example would be aid to—there was something called Aid to Families with Dependent Children, which was the major form of federal welfare, uh, for decades, and that offered money to the states, um, but, uh, there had—the conditions were attached by the states that poor individuals—it was usually single mothers—had to allow caseworkers into your home to evaluate your needs. And that was often done, by the way, at midnight or shortly thereafter, with just a sudden knock on the door and caseworkers would barge in because they were trying to figure out whether the mothers were indeed, uh, single mothers, which was the qualification or condition of getting the money. So the condition was essentially used to justify, uh, Stasi-like attacks and—and—and night raids on your house. And this is, of course, specialized attacking the poor.
Um, and that gets to a larger issue here, which, um, is this: we’re all vulnerable. Even banks and universities are vulnerable to conditions because they’re desperate for the money. Um, but the poor are especially desperate. And this is a way of undermining the rights of the poor more than anyone else, uh, which leads to certain equal protection problems. Um, it’s all quite—and it—and of course, it’s the—it’s the same, it’s the same issue of the government on the one hand prohibiting something, then giving back permission to carry on the activity which a second ago they prohibited, but giving it back with conditions.
Federalism and the Usurpation of State Power [24:45]
Bob Zadek: Now, a lot of what Philip and I are talking about would be okay if you felt that states were anachronistic and had no relevance in 21st-century America. If you felt that states were stupid, and we should have one federal government, um, one government, all power in 12 square miles of the District of Columbia, and that’s—and with you having only the most, uh, distant and remote, uh, control over your government. If you feel states are stupid—um, a non-political science term, but you know what I’m talking about. If you feel that states are stupid, then a lot of what Philip is saying doesn’t cause outrage.
But most Americans, the polls indicate, they like the idea of government being local. Tip O’Neill observed, “All politics is local,” that local matters. If you want to have more control over your government, then you favor power to the states, and you favor power to the cities and power to the counties and power to the school boards, because it’s more and more and more local. So a lot of what Philip is explaining to us this morning is simply a usurpation of state and local power by the federal government. They can’t do it directly because the Constitution prohibited it—prohibits it, at least it did at one time. So this is a trick, the—and, uh, a technique which, with the Supreme Court’s endorsement—that’s another subject. With the Supreme Court’s endorsement, we have in effect, um, contributed to the irrelevancy of states.
So this subject is of crucial importance to you to the extent that you value the fact that states are separate and equal branches of government vis-à-vis Washington, that states have their areas of power somewhat exclusive, and Washington has its more narrow areas of power. If you favor the concept of federalism as delivered to us in 1787, then this conversation is truly important.
Now, Philip, you mentioned something in your book that I hadn’t thought of in this context, but you’re exactly right. And, uh, please explain it. You mentioned plea bargaining, which I dare say the audience generally knows about, although perhaps not to the extent—but how is plea bargaining an example of the government using its coercive power of taking away rights on the one hand and then giving them back conditionally on the other? How does plea bargaining fit into that conversation? Thanks.
Plea Bargaining and Constitutional Extortion [28:10]
Philip Hamburger: Um, plea bargains may be one of the most common venues for conditions. Um, the government will charge you with a crime, perhaps overcharge you—uh, is their wont. Um, then say, “Oh, by the way, uh, if you settle this, uh, we can all go home happy. You get a lower, uh—a lower charge, and we don’t have to go to the expense of a jury trial.” And usually in plea bargains—plea bargains—there’s about—you—you should get one-third of the charged, uh, sentence. What’s more, uh, these days around 97% or more of federal charges get settled this way. So it’s—it’s a primary mode by far of determining what your sentence will be, not to mention your guilt.
Now, plea bargains aren’t necessarily unconstitutional. Um, they can be quite useful, and—and why shouldn’t one settle if one can get a good deal? But there are dangers in here. Um, one is that when prosecutors regularly overcharge, as they do with, for example, with conspiracy charges, um, they can extort more. Um, and the other danger is that some of the conditions placed in a plea bargain are—can be unconstitutional. So, for example, if you are required to give up a jury trial in your current proceeding, that’s perfectly constitutional. If you’re asked to give up a jury trial in a subsequent proceeding, that’s another matter. Um, if you’re asked to, uh, testify about yourself, even against yourself in a current proceeding, that’s one thing. If you’re asked to testify in another proceeding, that gets more complicated. Those look like attempts to control your constitutional rights, to deprive you of them.
Or, for example—and this is a very serious example, particularly serious example—when the SEC settles a proceeding, um, with a defendant and adds a gag order, as they do now by rule. You have to get the—to get the settlement, you have to promise you will not talk about the case. What it’s doing is it’s silencing defendants who settle, uh, barring them from exposing unconstitutional conduct of the Securities and Exchange Commission. This is grossly unconstitutional. It’s the use of a plea bargain, uh, essentially to quiet one’s critics. So this gets very, very dangerous. And so some plea bargains are surely not only unconstitutional, but a threat to our constitutional system as a whole. I think the SEC’s, uh, gag orders are a very good example of that. And by the way, we can’t do that. I think some of those currently—that’s one of our targets against the SEC at the New Civil Liberties Alliance.
Bob Zadek: Ah, now that you mentioned that, um, it’s a good time for us to give the website again, because so the audience can now hear all the good work you’re doing, which we’ll do before the end of the show, so they can help you in your efforts. You gave, uh, Philip, uh, you gave plea bargaining almost to the, uh, positive imprimatur in your description. You said, of course, people can negotiate if—get a better deal. There’s—there’s another darker aspect, if you will, to plea bargaining. It starts one step earlier. Congress imposes very, very harsh, extensive sentencing guidelines upon bad acts. Uh, and they do so because no one ever lost a seat in Congress because they were too harsh on criminals. So that’s an easy vote for representatives and senators to take. So they start with harsh sentencing, and they end up saying to themselves, so they can sleep at night—if in fact they can, so they can sleep at night—saying, “No problem, they’re all going to be plea bargained down anyway. So we’re really not imposing a harsh sentence. We’re imposing a sentence of only one-third that which we state.” So we get some positive feedback from our voters, we get the vote for throwing away the—the key on the bad guys, and they don’t really harm the individuals anyway, because they plea bargain.
Plea Bargaining and Sentencing Guidelines [31:41]
Bob Zadek: But in imposing harsh sentencing to begin with, they give the tool to the prosecutors to say, “Okay, you’re going to get 90 years for shoplifting. Uh, but if you plea bargain down, uh, we’ll put you away for nine months.” No, but I’m exaggerating, of course. Uh, but the point is it starts with the harsh sentencing that nobody could defend on the merits, but that’s where you start. Without harsh sentencing, then an alleged, uh, criminal would be less incentivized to plea bargain because they’re gambling with less time. So I just wanted to remind the audience of that. There’s one—you go one step earlier in the process where government deprives you of the most cherished rights: the right to be free, the right not to be in jail. They take that away, and then they give it back or shorten it with plea bargaining. And in plea bargaining, you are in effect surrendering your right to a trial by jury, a trial by your peers—a right which goes back at least, if not before, the Magna Carta in 1215. So it is a core human right that you sign away just to avoid being over-incarcerated because of Congress’s harsh sentencing. I just wanted to put the plea bargaining in context now.
Philip Hamburger: Can I add to that? I think that’s absolutely right. Please, I—I—I—I generally tend to understate problems because the problems are so serious that if you actually say them at their full height, people don’t believe it. Um, I think it’s best to start gently. But it does seem to me you’re absolutely right about the overcharging being a mechanism for depriving people of their jury rights. And when this is done under the sentencing guidelines, I think there’s another constitutional problem. Um, the sentencing guidelines are created by a Sentencing Commission, including judges. And initially this was upheld as lawful in a case called Mistretta v. United States. And then the judges had some misgivings. And they said, “No, these aren’t binding, but these are advisory.” But that leads to another constitutional problem, of course, because a judge is not allowed to give advisory opinions. And when judges sit on a commission and propose sentencing guidelines, even if they’re only advisory, um, there’s a risk that they’re giving something that’s akin to an advisory opinion. They’re participating in something that’s essentially lawmaking and giving, uh, a sort of understated advisory opinion that these are lawful sentences. And that leads to a profound danger to the judiciary if they engage in advisory lawmaking. So it seems to me the sentencing guidelines, even in advisory, uh, status, are unconstitutional because of judicial participation in forming them. And, uh, one day I hope to challenge this, amongst many other elements of this. It’s very, very worrisome.
Federalism and the Build Back Better Tax Mandate [36:20]
Bob Zadek: In your book and in your various appearances in explaining the concepts of your book, you reminded us—and I’d like you to do so again, if you will, for our audience—you reminded us of, uh, a very recent and quite egregious attempt, uh, by the federal government to use, uh, tax dollars, which they took from the—by higher taxation, which means it’s money that could otherwise be obtained through taxation by the states. So when the federal government taxes individuals—the income tax and corporate income tax—when it does so, it is to some degree taking away from the tax pool money that would otherwise be available to the states. In other words, now, one can say the states could of course tax, and they often do, on top of the federal government. But it becomes harder for states to raise their own income taxes if, when added to the federal income tax, it becomes too much and people leave New York and California to go to low-tax states. So to some degree, it’s correct to say, to the extent that the federal government takes money from citizens of a state by taxation, it’s money that would otherwise be available and perhaps no longer is available to the states. So taxing individuals is in effect, in a manner of speaking, taking away revenue—if you can call taxation revenue—from the states. Now, uh, in the recent example, Phil, I’d like you to explain. Um, in Build Back Better—what an obnoxious name—in Build Back Better, the Biden administration, um, offered money to the states. Um, again, using the money they took from the citizens of those states, it offered money back to the states, but on the condition the states not lower their taxes. Now, the—the public was up in arms about that, but tell us about that, if you will, because it fits right into the premise of your book.
Philip Hamburger: Right. Thank you. And, and this in fact is, uh, one of the cases that the New Civil Liberties Alliance is now litigating, and I trust will win. Um, the—it’s really quite extraordinary. The federal government, in attempting, uh, to impose its policies and buy compliance from the states, uh, is worried, of course, that some states will essentially, uh, use the money to reduce some of their own taxation—uh, being a natural and reasonable response. Um, so they—they—they had this extraordinary condition earlier this year: the states, upon receiving federal money, may not lower their taxes. Um, this is clearly unconstitutional. Um, for one thing, um, spending to the states is unconstitutional. For another, it’s a condition on the states that is attempting to regulate them. And that should be done through an act of Congress, not through condition. But of particular salience here, it’s commandeering the states. It’s commandeering one of their central policies. It’s directing the states how to engage in taxation, um, in exchange for federal money. Now, the federal—the Constitution—the, sorry, the Supreme Court has, uh, complicated these matters because it said, well, the federal government cannot commandeer the states coercively, and the federal government has read this as a license then to commandeer the states through conditions, because they say, “Oh, conditions aren’t coercive. It’s a deal; it’s just consensual.” So what could be wrong with this? But of course, um, this rearranges the structural relationship of the federal government to the states. They’re independent sovereigns, and we as a people have a right to govern ourselves in our localities. That’s our federal—federalism is not just a structural matter; it’s our freedom of self-government. And so this is an attempt to purchase—for the federal government to purchase its way out of this constitutional structure and to deprive us of our right of self-government in the states. So this seems grossly unconstitutional, and, uh, I—I think it will be, uh, held so by all the courts. We’ll see.
Bob Zadek: And of course, the—the pure political motivation is, uh, the—the high-tax states are of course New York and California and Illinois, and they were losing customers—read taxpayers—they were losing customers to low-tax states. Um, the low-tax states tended to be, uh, governed by Republicans and the high-tax states governed by Democrats. And by the way, that is not a coincidence, uh, just so you understand.
Philip Hamburger: Right. Although if I may, I—I—I think Republicans have sometimes been just as bad as Democrats. There’s a lot of blame to go around. Many Republicans have voted in favor of utterly unconstitutional conditions and in favor of higher taxes. So, um, I—I—some may be—some of our politicians may be worse than others, but there’s—there’s—there’s a lot of blame to go around, I’m sorry to say. But the—the motivation for this particular measure was to reduce the competition for taxpayers, i.e., customers, uh, from high-tax states, and, um, there would be a disincentive—
Global Tax Coordination and Competition [40:15]
Bob Zadek: They’re trying this at many levels. It’s not really the states. The—the attempt to have an international sort of, um, sort of coordination of taxes is an attempt to do this at an international level too, right? They’re trying to squeeze out variation so that they’ll have a uniform tax, uh, minimum rate across the world. Um, and they do that internally in the states and externally with other governments. And that’s all very worrisome because it means there’s no way of opting out and trying something else.
Bob Zadek: Of course, um, I was—I was—I was going to draw the parallel, Phil, and you—you stole my thunder.
Philip Hamburger: I’m sorry, but you’re welcome to—
Bob Zadek: You’re the—no, you’re the guest. The guest—the guest comes first in this show all the time. You’re the guest. Um, so, uh, Phil is refer—Philip is referring to Janet Yellen. Well, she’s not the, uh, creator, but she is the great sponsor these days, uh, of a provision that’s gaining a lot of momentum where she is obtaining the consent of all of the major industrial countries in the world to agree not to compete on the basis of lower taxation and to all agree to have a 15% minimum corporate income tax. So corporations who feel overtaxed in the U.S. can’t run to Ireland or wherever they might run, um, to avoid taxation. Um, if all the states in the world agree to the same, there’s no competition.
Antitrust and the Suppression of State Competition [42:12]
Bob Zadek: It’s the same thing as what I mentioned a second ago about what the federal government attempted to do and what the New Civil Liberties Alliance is attacking, which is to exchange federal tax dollars for a promise by the states not to try to compete on the basis of lower taxation. Now, notice when you eliminate taxation, you eliminate freedom. What happens if countries or states are competing on the basis of lower tax policy? We are offering freedom, in the case of the federal government, of us citizens to pick where we live on the basis of, among other things, tax policy. Well, once you, in effect, have this monopolistic approach and saying you cannot compete on price—that, by the way, is a crime if businesses do it. Remember, we have antitrust legislation. So this is, in effect, if you want to impose a test, it flunks the test of the Sherman and Clayton Antitrust Acts, by the way, federal government.
That’s a different subject, but they prohibit the states from competing on the basis of tax policy, which means you remove the freedom of New Yorkers to move to Florida for lower taxation. So any attempt to eliminate competition is a direct attack on freedom. And that is like—to borrow a phrase from President Obama—that is a red line that should not be crossed. You cannot take away our freedom. Now, Philip, in your book, what do you propose? What are the action items that you wish would be different, and what would have to change for you to, if you will, buy a little happiness?
Philip Hamburger: Right. So this is a case in which I don’t think we need more legislation, whether from the states or from the federal government. What we need is better, more intelligent litigation. And so one of the goals of the book is to first help the judges see the problem more clearly. It’s not just that their doctrine has been wrong; they haven’t really recognized the way we’re governed now. They think we’re still governed as if it were Schoolhouse Rock—that, you know, there’s a bill passed by Congress. In fact, we have an administrative state, and it’s not just administrative edicts; we also have conditions on spending. So I want them to understand money as a mode of power. And once they understand that, I think their doctrine will shift a little bit.
And then secondarily, my hope is that litigators and Americans will begin to challenge some of these conditions as unconstitutional. And in fact, the book ends with a checklist for the benefit of lawyers and their clients. I think once one gets that money is power—unconstitutional power in this instance—the world looks different. And so that one little insight, I think, can lead to a whole host of opportunities to challenge much of the unlawfulness in court. We’re doing that at the New Civil Liberties Alliance, and I hope others will do so too. But the more we inform ourselves about simply the truth of how we’re governed—whether it be that we’ve lost our right to elect our lawmakers to administrative power, and we’ve lost it still further through conditions—once we get that, once we get that our constitutional rights are at stake, we’ll begin to push back. There’s a new—I call it a new civil liberties movement, and we at the New Civil Liberties Alliance want to be the vanguard of that.
Coercion Through Spending and Tax Exemptions [48:15]
Bob Zadek: Litigation. There are subtleties in your book that you really did, in my opinion, a public service—at least if I am the entire public—because I learned something, where you linked this concept we’ve been talking about with tax policy in very interesting ways. You explained how something as basic—at least we have long since accepted it—as churches who get tax exemptions, that is, the revenue (I’m not calling it income, it’s revenue from contributions and the like) is not taxed. Indeed, contributions to any nonprofit is not taxable. Now that seems like, well, that’s a good idea. Why should—if the power to tax is the power to destroy—why should the government have the—or the government should not have the power to destroy religion? That’s another first principle of our country.
So if we allowed the government to tax churches, which was the case in revolutionary America before the founding of the country, if the government could tax churches, then it could destroy them. But now today, the tax exemption is now once again economic power that the government uses to coerce, as you point out in the book. And before you respond, Philip, also another tying in of this principle is you point out something again generally accepted, which is public housing and giving lower-income people housing—free housing or subsidized housing—but only if they surrender constitutional rights. So please explain for our audience how the principles in your book directly apply to church tax exemption and public housing. And public housing is simply an example. Poor people are always asked to surrender constitutional rights in exchange for money. So please explain how this applies—we have about a minute or two—in the principle of public housing.
Philip Hamburger: Okay. So first, of public housing: many jurisdictions require individuals living in public housing to give up some of their rights, just to, you know, searching their apartments and the like. That’s probably unconstitutional. The other example of the churches is that 501(c)(3) of the tax code conditions tax exemption from the income tax on giving up your political speech. Churches and other nonprofits are said that they have to give up their right to lobby and to participate in elections. Now, this is grossly unconstitutional. It assumes that not taxing you is actually a gift of money. But it’s also, just to sober one up, highly prejudiced. The individual who first proposed this combination of speech limitations was none other than Hiram Evans in 1930, the Imperial Wizard of the Ku Klux Klan. So we have federal tax law carrying out Klan policy about suppressing church speech. And the Supreme Court doesn’t bat an eyelid. That tells you something about how disconnected the judges are from the realities, again, of how we’re governed and where these laws come from.
And in public housing, just to finish up that topic, people who live in public housing consent to the government being able to inspect their housing without a warrant. And government is different. They carry guns. So the fact that a private landlord may ask for that, that’s a negotiation. But it’s not a negotiation with the federal government because they carry guns. Landlords don’t carry guns. And many of these conditions, I should say, are also imposed by the states. The states are not innocent. And it gets back to what you were saying earlier about the devolution of power and the diversity of jurisdictions and their policies being important. This is essential to our freedom.
But even if you’re not attached to your freedom, even if you’re interested in good policy, one has to hope to disperse policy error. And when you monopolize all government power into one agency or one government or just a few of them or coordinate them too much, you’re not dispersing error. You’re actually exaggerating it. And so even if we’re not interested in freedom, even if one’s just interested in good regulation and policy—which it seems to me is a somewhat myopic approach, but that’s true of many academics, for example—one still should want to disperse all of that power to states, to localities, and to individuals. Science is all about the dispersion of error, about exploring new ideas individualistically. And so if one’s attached to scientific power, one should want to disperse all of this energy and power, not concentrate it.
Bob Zadek: This is Bob Zadek. We’ve been speaking to Philip Hamburger. Philip has written Purchasing Submission: Conditions, Power, and Freedom. And Philip defends our freedom through the New Civil Liberties Alliance. Please support the effort of the Alliance. They are working for all of us, and there is no free lunch. They cannot work for all of us without our help. This is Bob Zadek thanking Philip for joining us for this hour of his time on the weekend, and asking you to please check out my podcast. Give us as many stars as you think we have earned, and provide your comments, requests, and suggestions. They are all read and all welcome. So long for now, I’ll be back again next Sunday. And thanks again to Professor Philip Hamburger for his great work working for all of us. Have a good Sunday.
Philip Hamburger: Thanks so much. Great to be here again. Thank you.
Bob Zadek: Thank you, Philip.