Time-shifted live-blogging of this morning's Obamacare oral argument in the U.S. Supreme Court.

I've finally got time to curl up with a nice MP3 and transcript. I'm going to treat this like a live-blog, with frequent updates until I get to the end.

UPDATE 1: Paul Clement will attack the expansion of Medicaid. He's talking about whether it's "coercive," because if it is, it won't fit the Spending Power. Justice Kagan wants to know why a "big gift from the Federal Government" is coercion. "The Federal Government is here saying, we are giving you a boatload of money." Page 3. Just a big old boatload of money is coercive, Clement says confidently. But the actual bill has a "very big condition." Kagan interrupts, trying to make her point that a big boatload of money is not coercive. What if someone offered you a job and would pay you $10 million a year. Of course, you say yes, but you're not coerced are you? Clement lays down one of the cleverest teasers I have ever heard: "Well, I guess I would want to know where the money came from."

"Wow. Wow." says Kagan. Has a Supreme Court ever said "Wow. Wow" before? She can't believe you'd do anything other than snap up that money. "I'm offering you $10 million a year to come work for me, and you are saying that this is anything but a great choice?"

Clement springs his trap: "Sure, if I told you, actually, it came from my own bank account."

Kagan resists. Yes, it's tax money, but the tax money the federal government rakes in is from the taxpayers "acting as" U.S. citizens. It's not the state's money. Their money is the money that's collected from citizens "acting as" citizens of a particular state. Clement re-grounds us "in the real world." People only have so much money, and the more the feds drain out of the people, the less there is for the states to tap into. The point is this "boatload of money" isn't free money. It's money that was taken from the people of the state and then offered back to the state governments, who might have liked to take money directly from their citizens, available to be used for whatever purposes the states have in mind, and not the things the federal government tells them to do.

UPDATE 2: Clement argues that there must be some limit on the Spending Power, on how extreme the "big gifts" — with conditions attached — can be, because "this Court's entire spending power jurisprudence is premised on the notion that spending power is different, and that Congress can do things pursuant to the spending power that it can't do pursuant to its other enumerated powers precisely because the programs are voluntary." Clement has a very difficult argument to make. The states have been taking this money for a long time, and there have been periodic expansions, and the states are told "take it or leave it" (as Ginsburg puts it). He needs to argue that somehow this new expansion is creating something separate and inappropriately connecting it to old money streams from the federal government to the state, which makes it very hard for the state to say no. But it's the fed's money, and they're setting the terms the states have to meet to keep the old income streams flowing.

UPDATE 3: Justice Breyer takes great pains to show that the government might not exercise its option to close up all those old income streams, because it is always under the obligation to act "reasonably." Finally, Justice Scalia breaks in: "Mr. Clement... do you agree -- do you agree that the government has to act reasonably? Do we strike down unreasonable statutes? My God!" With that prompting, I see that it sounds like Justice Breyer was assuring us that we are living in the Lochner Era, when courts assessed the reasonableness of legislation. There's an intense disagreement here, with Breyer talking about the executive branch implementing statutes, which must be reasonable, and Clement and Scalia talking about what is in the statute, which will not be tested for reasonableness.

UPDATE 4: We finally hear from Justice Kennedy, at page 35: "If the inevitable consequence of your position was that the Federal Government could just do this on its own, the Federal Government could have Medicaid, Medicare, and these insurance regulations, assume that's true, then how are the interests of federalism concerned? How are the interests of federalism concerned if, in Florida or Texas or some of the other objecting States, there are huge Federal bureaucracies doing what this bill allows the State bureaucracies to do?"

Clement hits Kennedy with a word Kennedy has used himself in federalism cases. (For example, United States v. Lopez.) The word is "accountability." Clement says: "If the Federal Government decides to spend money through Federal instrumentalities, and the citizen is hacked off about it, they can bring a Federal complaint to a Federal official working in a Federal agency."

(Here's Kennedy in Lopez: "The theory that two governments accord more liberty than one requires for its realization two distinct and discernable lines of political accountability: one between the citizens and the Federal Government; the second between the citizens and the States. If, as Madison expected, the federal and state governments are to control each other, see The Federalist No. 51, and hold each other in check by competing for the affections of the people, see The Federalist No. 46, those citizens must have some means of knowing which of the two governments to hold accountable for the failure to perform a given function. 'Federalism serves to assign political responsibility, not to obscure it.'... Were the Federal Government to take over the regulation of entire areas of traditional state concern, areas having nothing to do with the regulation of commercial activities, the boundaries between the spheres of federal and state authority would blur and political responsibility would become illusory.... The resultant inability to hold either branch of the government answerable to the citizens is more dangerous even than devolving too much authority to the remote central power.")

UPDATE 5: The SG says that Congress, setting up this conditional spending program, jumped through all the doctrinal hoops set up in South Dakota v. Dole, but I note that South Dakota v. Dole did say that at some point federal spending amounts to coercion. (It said: "Our decisions have recognized that in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which 'pressure turns into compulsion.' Steward Machine Co. v. Davis...") And Justice Scalia, alluding to that language, asks what it means. What is this "coercion" limitation?

The SG says that "it's possible to envision a situation in which there's coercion." Hmm. Yeah. But tell us what that situation is?! This is like yesterday, when the SG was asked to state the limit on the Commerce Power, and he just couldn't do it. Now, the SG refers to a condition that fundamentally transforms the structure of the state government, but that refers to a kind of condition, not what would entice/coerce the state into accepting the condition. The Chief Justice points that out: You're not talking about the coercion question. What if the federal government had a condition that you could take or leave, but you'd lose all your federal funding? The SG says "that would raise a germaneness issue," which is a reference to one of the doctrinal hoops in Dole (the condition must relate to the spending program), but the coercion idea is separate  — and surely the SG knows that. Getting the doctrinal points of Dole straight is first year law school stuff. It's like he's playing dumb. It's really annoying, and the Chief Justice is annoyed.

UPDATE 6: The SG persists in saying that it's hard to imagine a situation in which the condition would not violate the germaneness requirement by the time it got coercive. Roberts and Scalia scuffle with him and suddenly Alito comes to the rescue with a great hypothetical:

Let's say Congress says this to the States: We have got great news for you. We know that your expenditures on education are a huge financial burden, so we are going to take that completely off your shoulders. We are going to impose a special Federal education tax which will raise exactly the same amount of money all of the states now spend on education, and then we are going to give you a grant that is equal to what you spent on education last year.

Now, this is a great offer and we think you will take it, but, of course, if you take it, it's going to have some conditions because we're going to set rules on teacher tenure, on collective bargaining, on
curriculum, on textbooks, class size, school calendar, and many other things. So, take it or leave it.

If you take it, you have to follow our rules on all of these things. If you leave it, well, then you're going to have... to tax your citizens, they're going to have to pay the Federal education tax; but on top of that, you're going to have to tax them for all of the money that you're now spending on education, plus all of the Federal funds that you were previously given.

Would that be -- would that reach the point -- would that be the point where financial inducement turns into coercion?

The SG says no! The states have a choice, he says, to which Alito responds: "But if that's the case, then there's nothing left of federalism."

That's a dramatic statement, and the SG only natters away about how there are political constraints on Congress. That is, there's nothing left of judicially enforceable federalism, but we've still got the supposed political safeguards of federalism (i.e., the way Congress will, on its own, restrain itself from too much imposition on the states). This is the SG's theme throughout the arguments this week: It is sufficient to let Congress do whatever it wants.

UPDATE 7: There's a long section of debate about whether the Secretary will use her discretion to cut the states off from all their funds (and whether there's a judicially enforceable limit on that discretion). Suddenly, Justice Kennedy breaks in, and he's using his buzzword again: accountability!

I suppose one test could be -- I just don't see that it would be very workable -­ is whether or not [the loss of funding is] so big that accountability is lost, that it is not clear to the citizens that the State or the Federal Government is administering the program, even though it's a State administrator.

See how that is the same idea he was using back in 1995 in Lopez? The SG blabbers in response (as if he's not too well versed in what moves Justice Kennedy, which you would think would be his primary concern). Kennedy comes back:

In your view -- in your view, does federalism require that there be a relatively clear line of accountability for political acts?

That, my friends, is Essence of Kennedy! But the SG doesn't notice. He doesn't see how exquisitely special that question is. Kennedy puzzles on: "Is that subsumed in the coercion test, or is that an independent one?" Come on, SG! If you're good for anything, tell him it's special! Again, the SG natters, but the nattering contains nothing about political accountability. Kennedy pleads again for attention to his dearest concern:

But do you agree that there still is inherent and implicit in the idea of federalism, necessary to the idea of federalism, that there be a clear line of accountability so the citizen knows that it's the Federal or state government who should be held responsible for their program?... And does coercion relate to that, or is that a separate doctrine?

Finally, the SG addresses accountability: It's the other side who are arguing that they take "unpalatable choices" because they are subjected to "a high degree of political accountability," which they're trying to call "coercion." That misses Kennedy's point. Kennedy wants the doctrine to work to make the different governments accountable to the people. He says: "Well, but I think the answer would be that the State wants to preserve its integrity, its identity, its responsibility in the Federal system."

UPDATE 8: Quite a bit later, Justice Sotomayor endeavors to bring the SG back to Justice Kennedy's accountability theme, but not in a particularly coherent way: "Justice Kennedy asked you whether... it's coercion if no one can be politically accountable. I'm not sure how that could be practically politically accountable because almost every gift -- if the terms are attractive, it would be an un -- unattractive political alternative to turn it down." I think she means political accountability must necessarily be a separate question from coercion. The point is these tremendously enticing offers destroy the state's will to say no. They're not coerced, but they lose their independent political identity, and that is destructive to federalism.

UPDATE 9: The SG talks about liberty: "millions of people with chronic conditions like diabetes and heart disease, and as a result of the health care... they will be unshackled from the disabilities that those diseases put on them and have the opportunity to enjoy the blessings of liberty." There's freedom inside all this compulsion and coercion, because when the government supplies your needs, then you can enjoy life. That's the argument!

UPDATE 10: Clement, back in rebuttal, riffs on the SG's liberty remarks: "[I]t's a very funny conception of liberty that forces somebody to purchase an insurance policy whether they want it or not. And it's a very strange conception of federalism that says that we can simply give the States an offer that they can't refuse, and through the spending power which is premised on the notion that Congress can do more because it's voluntary, we can force the States to do whatever we tell them to."

UPDATE 11: There's still another hour! This is the severability part. Clement is up first, arguing that if the individual mandate is stricken down, but the guaranteed-issue and community-rating don't fall along with it, then insurance premiums will "skyrocket."

UPDATE 12: Is the test what Congress would have wanted (whether it would want the whole act to fall if one provision falls)? Scalia suggests that's the wrong approach. The severability question is difficult, as the Court struggles with the sprawling legislation. Clement says there's a "heart" to it, which includes the individual mandate, and the provisions interrelated with it, which will not work the same way without it, and these must fall. Then there's all that peripheral stuff, which could work independently, but Clement calls these things the "hollow shell" of the act, which should fall because they wouldn't have been passed without the rest of the bill. It could also be left standing, he concedes. Everyone seems agitated by the prospect of tearing it all down. 

[THERE'S MORE TO COME, but I can't get to it tonight. It's just too onerous for now. ]