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On July 2, 1776, Congress voted for the Declaration of Independence. Most of the members signed it on July 4, although more signed over the next month.
The problem was this: a declaration of independence from King George III (and from Parliament, which was really the source of bureaucratic meddling and taxation of a staggering 1% of GDP), was that it led within six years to massive debt, hyperinflation, and increased taxation. After 1788, it led to more of the same. It has finally led to Nancy Pelosi’s ideological agent on the bench, John Roberts.
In upholding Obamacare, which is in fact Pelosicare, Chief Justice Roberts wrote the majority opinion. He indulged in some lawyer-like deception, as lawyers are paid to do. The law specifically says that the mandatory payment for not buying insurance is a penalty, not a tax. He determined that this penalty would be unconstitutional if it were a penalty (commerce clause), so, lo and behold, it’s a tax!
This is all nonsense, of course. The government has regulated lots of things under the commerce clause, telling people what they must do, can do, and cannot do. If the Supreme Court gives any regulation a thumbs-up, the regulation continues. No single case is going to reverse the federal bureaucracy from pursuing its agenda under the commerce clause.
One man’s opinion on what the commerce clause means is merely his opinion. This opinion does not bind the federal bureaucracy or any future Court decision. It just gave Roberts a way to justify his theory of the legality of unlimited federal taxation, now to be collected as fines for not buying health insurance.
He argued that the government can now force residents and citizens of the United States to buy health care insurance that they do not want, or else face a government-imposed fine for not buying it. He called this a tax. The majority five accepted this.
To the extent that his opinion has established a precedent, Roberts has at long last legalized open economic fascism to America. Of course, it has been alive and well ever since the New Deal, and really since the First Bank of the United States (1791 to 1811). But now it has been placed under the judicial umbrella of a Supreme Court decision.
Economic fascism is the doctrine that there is a government-business alliance that makes the nation wealthy or strong militarily. This idea has never had a judicial basis before. Now it does.
A tax in America prior to last week was a payment by the citizen or legal entity to an agency of civil government. Not so in the new, improved American fascism, as articulated by Chief Justice Roberts. In fascism, a compulsory payment to a private, profit-seeking entity is considered a tax. You can pay it to an insurance company, or you can pay a fine to the federal government. Take your pick. They are both taxes.
The first fascist agency in post-Constitution history was the First Bank of the United States. It went out of existence in 1811. The Second Bank of the United States created a replacement: 1816 to 1836.
In the historic case, McCulloch v. Maryland, Chief Justice John Marshall announced that “the power to tax is the power to destroy.” He got the phrase from the attorneys who argued the case. It was not original with him. Conservatives love to quote that phrase. Conservatives are blind. Marshall used this doctrine to keep Maryland from levying a tax on a private entity: the Second Bank of the United States. In striking down this state tax, Marshall established the legality of economic fascism in America: the government-business alliance.
Maryland correctly argued that Congress did not have the right to delegate sovereignty to a private agency. This was the judicial heart of the matter. But Daniel Webster, who was the Bank’s legal counsel, argued that Congress did have this right. Marshall sided with Webster.
The argument of Maryland is never discussed in the textbooks. This is one of those crucial facts in history that has gone down Orwell’s memory hole. Marshall’s creation of tax immunity for the Bank established the central legal principle of central banking. This is the cornerstone of the Federal Reserve System. It is sacrosanct. This is why any reference to Maryland’s case against the Bank is not discussed. The textbooks discuss Marshall’s principle as if the Bank’s position as a private agency under the government’s legal umbrella were somehow constitutional. It is constitutional only because Marshall steadfastly refused even to reply to the central argument of the state of Maryland.
Wikipedia provides the textbook version of the significance of this case.
This fundamental case established the following two principles:
The Constitution grants to Congress implied powers for implementing the Constitution’s express powers, in order to create a functional national government.
State action may not impede valid constitutional exercises of power by the Federal government.
Marshall’s verbal smokescreen worked. In fact, the decision established this principle above all: A privately owned central bank that is functionally independent of Congress possesses the legal characteristic of federal sovereignty, and is therefore immune from regulation by any lower jurisdiction.
This is never discussed. This is why it is so difficult to find the text of the opposing attorneys. Before the Internet, is was almost impossible. We never saw an extract from Maryland’s argument. We never saw even a summary: the issue of delegated sovereignty to a private entity.
That decision handed over the nation to private central planners. The central bank has the power over the central institution of the free market: money. Marshall gave America economic fascism at the center of the economy: money. Jackson and Congress removed it. He let the Second Bank’s charter lapse in 1836. (Note: the following year, 1837, was the only year in U.S. history in which the U.S. government had no debt.)
Woodrow Wilson reimposed the system, under which we live.
Marshall’s opinion stuck.
If Roberts’ opinion sticks, the national fascist state has its marching orders.
The central government in Washington now has the power to compel Americans to pay private companies for services they do not want, on penalty of a fine. But this fine is now called a tax.
I have read a conservative’s whitewash of this monstrous decision. The writer says this was a ruling of great cunning. It was, indeed. This is one more example of terminally naive conservatives who dream that the American fascist state can be reversed on a legal technicality. Not now. Not if Roberts’ argument sticks.
Roberts has enunciated as a principle of law the fundamental principle of the fascist economy: there is a legitimate government-business alliance, established by law, which places government over the private, profit-seeking business, and the business in return is granted some of the immunities possessed by the state. It means that a business can make you an offer you can’t refuse. This principle is now the law of the land.
Americans must now pay insurance companies their pound of flesh or else pay a fine to the federal government. This fine is called a tax by Roberts.
Watch premiums rise!
ECONOMIC FASCISM: INDIRECT AND DIRECT
In 1819, the attorney for the state of Maryland argued against the chartering of a profit-seeking central bank is the name of the power to tax or in the name of the commerce clause. His words seem prophetic. He asked the right questions. John Marshall rejected the obvious answer: “no.” He said “yes.” He upheld the Second Bank of the United States. We would be wise to understand the issues raised by the losers.
But we contend, that the government of the United States must confine themselves, in the collection and expenditure of revenue, to the means which are specifically enumerated in the constitution, or such auxiliary means as are naturally connected with the specific means.
But what natural connection is there between the collection of taxes, and the incorporation of a company of bankers? Can it possibly be said, that because congress is invested with the power of raising and supporting armies, that it may give a charter of monopoly to a trading corporation, as a bounty for enlisting men? Or that, under its more analogous power of regulating commerce, it may establish an East or a West India company, with the exclusive privilege of trading with those parts of the world? Can it establish a corporation of farmers of the revenue, or burden the internal industry of the states with vexatious monopolies of their staple productions?
Justice Roberts also said “yes” — not on the commerce clause, but on taxes. The power to tax is the power to destroy. It is also the power to force Americans to pay for insurance they do not want to fund high-risk participants in the program.
In 1819, American economic fascism was indirect and limited to central banking: a prohibition against a state tax on a privately owned, federally chartered agency. This indirectly subsidized a private corporation. Under Roberts’ economic fascism, Americans will be taxed by the government unless they do business with privately owned agencies. This indirectly subsidizes private insurance agencies.
Economically, nothing has changed. It’s the same old system. What makes this new variant new is that it is judicially protected under the taxation clause rather than the commerce clause.
It’s like dog turds or cat turds. Take your pick.
July 2, 2012
Copyright © 2012 Gary North