Episode Transcript
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Speaker 1 (00:00):
To break it all down.
Speaker 2 (00:00):
I'm pleased to have two different guests on from two
vantage points to dive in.
Speaker 1 (00:06):
Philip W.
Speaker 2 (00:07):
Magnus is a senior fellow at the Independent Institute and
the David J. Throw Chair in Political Economy. He's been
a research fellow elsewhere, has been a prolific author of
several books as well. I'm also pleased to be joined
by Thomas A. Barry, director of the Robert A. Levy
(00:29):
Center for Constitutional Studies and the editor in chief of
the Cato Supreme Court Review. Gentlemen, welcome to KOA. It's
good to talk with you both.
Speaker 3 (00:40):
Absolutely thanks for having us, Yes, thanks for having me.
Speaker 1 (00:43):
Thank you both for coming on.
Speaker 2 (00:45):
So I will start with our legal expert for the beginning,
and that would be you, Thomas A.
Speaker 1 (00:52):
Barry.
Speaker 2 (00:52):
Can you break down for us, just if you boiled
it down, what the essence of this case is between
the two sides with the Trump administration is arguing in
the court and presented the other day, and what the
point of suing the federal government have said?
Speaker 4 (01:09):
Absolutely, well, thanks for having me, and if you'll permit
me one brief correction. That third voice we heard talking
about the accretion of presidential power was Neil Gorstich.
Speaker 1 (01:18):
Now, excuse Melito, thank you. I'm embarrassed he's from Colorado.
How could I?
Speaker 4 (01:23):
Gorstich was much more skeptical of the administration than Alito.
Speaker 1 (01:26):
Was true the argument, thank you for that clarification.
Speaker 4 (01:30):
In a nutshell, this is about, as you said, the
text of AIPA, whether it allows President Trump to impose
these tariffs that he started on so called Liberation Day
as he put it, which have varied quite a bit.
Not every tariff he's enacted is a part of this
challenge because the lawsuits were filed months ago, so some
(01:51):
of the newer ones might not be an issue, though
their legal grounding might be undermined as well, depending on
the reasoning the court issues. But i EPA, this nineteen
seventy statute essentially has a long list of verbs and
nouns that the president can do if he finds that
there's an extraordinary and unusual threat and he declares a
(02:13):
national emergency and he claims that he needs to take
this action to deal with it. So among all of
those very long list of verbs, some of them are
quite broad. For example, nullify, void, prevent or prohibit importation.
So the president can say, you know, no one can
(02:33):
import platinum or gold or type tungsten or whatever from
Vietnam or China or something like that. But the keyword
is among those verbs is regulate, so it says the
president can impose in order to regulate. And then among
those objects of the verbs is importation. And what the
(02:54):
administration is hanging its hat on completely is that if
you combine those two regulate and then put in ellips's
importation that includes tariffs. The tariffs are essentially a regulation
on importation, and that they were necessary to deal with
the extraordinary two threats through to national emergencies, one being
the importation of fentanyl and the other being the so
(03:16):
called trade imbalance with various countries. And the administration's main
argument that they've made repeatedly in oral arguments is that
they don't want these tariffs. The purpose of these isn't
to raise revenue. This is what they're claiming now, though
President Trump has said some things at odds with this,
but their legal argument now is the purpose of this
isn't to raise revenue. It's to provide leverage to change
(03:37):
change people's behavior, and that the hope is that either
other countries will stop the flow of fentanyl, and thus
we won't need the tariffs anymore. So essentially the punishment ends,
or that manufacturing will increase in the US, the trade
imbalance will go away, and the things that we were
importing just voluntarily won't be imported anymore, and once again
(03:58):
tariffs won't be imposed. The administration's argument, in a nutshell,
is that they're dealing with these two extraordinary threats by
regulating importation and in this and tariff's count as among
the things encompassed by the verb regulate.
Speaker 2 (04:15):
Let's talk for a moment, Philip Magnus about that aspect
of this idea of a regulatory terrorists versus revenue raising tariffs,
because that is part of the distinction that the administration
is addressing, per what Thomas Berry just told us, And
it's interesting to me to hear this at the same time,
(04:35):
phil that the administration, particularly President Trump, has been touting
all kinds of revenue coming into the federal government. Look
how much money we've made in America from these tariffs.
Speaker 1 (04:46):
But before the Supreme Court, now, no, this.
Speaker 2 (04:49):
Is about regulatory terrorists, not about making money.
Speaker 3 (04:52):
Right right, So Trump has actually contradicted in footplop several
times on this particular point, including some of his own
court filings, and certainly is Economic advisors public documents that
they've released. Trump has been teuting that these tariffs, the
i EPA tariffs that are being challenged right now, are
projected to raise between about two point eight and four
(05:13):
trillion dollars in new tax revenue over the next decade.
And even as his lawyers are arguing this before the court,
the White House is tweeting out media eclipse of President
Trump bragging about all the revenue that's coming in even
an internal contradiction and messaging here, although one of them
they're arguing for illegal reason because they think if the
(05:33):
court accepts these tariffs as regulatory powers, they'll be granted
more deference in the leeway in the international arena. The
reason being that the tax power is so explicitly tied
to what Congress does in Article one, even though that's
as where the commerce regulation power comes from. But the
tax power itself is fundamentally seen as something that our
(05:54):
representatives in an elected body are supposed to have direct
and exclusive oversight on. So Trump wants to run away
from the tax claims in court even while he's making
them in public.
Speaker 1 (06:06):
And kind of dovetailing in with that.
Speaker 2 (06:08):
I want to ask you real quick of Phil Magnus,
because you were tweeting about this on x as well,
going back into the early mid well still pretty early
eighteen hundreds, during the nullification crisis, and you had the
debate that was going on there and some things you
were pointing out about John C. Calhoun, who's a former
(06:30):
Vice president of the United States, the seventh Vice president
of the United States. Talk to us a little bit
about what you're noticing from the Solicitor General that would
be the Trump administration's lawyer, John Sower, and what he
argued to the Supreme Court and John C.
Speaker 1 (06:45):
Calhoun from two hundred years ago.
Speaker 3 (06:48):
Well, that's the interesting thing. We've had all of these
arguments play out before it goes back to the earliest
days of the Republic. Because James Madison, basically the main
figure in the design of the Constitution and the main
record keeper at the Convention, introduces the first tariff bill
in seventeen eighty nine, and in his opening speech he says,
this tariff achieves two things. One is it raises revenue
(07:12):
to it regulates commerce and Madison's point was that tariffs
are actually a joint exercise of these two powers under Congress.
They are both taxes and regulation. And for your economic
followers out there, we also know that the economics of
tariffs work in this exact way. You put a tax
(07:32):
in place, it raises revenue, but it also discourages importation
at the same time thereby regulating it. So it's a
simultaneous exercise of these powers. Well, John C. Calhoun in
eighteen twenty eight, the US Congress passed something referred to
as the Tariff of Abominations. It was an extremely high
protective tariff following the philosophy of Henry Clay to basically
(07:57):
wall off America from foreign competition to protect our industries.
And Calhoun basically made the same argument. He says, this
is a regulatory tier if this is not a revenue tariff,
even though it was listed as the Revenue Act of
eighteen twenty eight. But Calhoun's point was, you can only
pick one of these two clauses at a time. It's
(08:17):
either a revenue tariff or a regulatory tariff. And he
had further arguments. He said that if this is a
regulatory tariff, it's unconstitutional because it doesn't fulfill the tax power.
Madison is still alive in this time, and he's still
writing commentaries on these debates to his friends and close associates,
and we have several letters from him. Madison rebukes essentially
(08:38):
the Calhoun position. He says, no, these are joint powers
exercise simultaneously, because every tariff does both things. It raises
revenue and it regulates commerce.
Speaker 2 (08:49):
And quite honestly, I would choose the words of the
father of the Constitution over John C. Calhoun, and particularly
on that one. Again, we're joined by Philip Magnus, who
was an economic historian, and by constitutional scholar Thomas Barry.
And Thomas, I want to come back to you because
one of the things that I've noticed, and I think
(09:09):
you've observed this too, is that President Trump's administration has
been searching around what's the legal justification we can find
for the broadest tariffs possible. We saw a similar thing
with Joe Biden and his presidency on things like in
particular the student loans issue.
Speaker 1 (09:29):
Can you speak to that?
Speaker 2 (09:30):
And presidents looking for a legal justification for their chosen
expansions of presidential authority.
Speaker 4 (09:39):
Yeah, that's exactly right. And this is the reason why
the Supreme Court has, over the last decade or so,
developed named doctrine. It's come to be called the Major
Questions doctrine. And it gets that a common sense idea,
which is that if the president starts with a policy
goal in mind, and he President Trump very much had
that goal in mind. He wanted tariffs, he made that
clear before he was elected. If he starts with a
(10:01):
policy goal in mind and then goes hunting for an
old statute to enact it because he can't get Congress
to give him what he wants, you should be more
skeptical about whether that legal argument is correct, especially if
that old statute has been around for a while but
has never been used in the way that the president
is now using it. So we saw this playout under
(10:22):
President Biden with student loan forgiveness. This was a major
issue in the twenty twenty election. He had a lot
of pressure from his base to an act student loan forgiveness.
Bills were introduced in Congress, but none of them could
get passed. So he uses an uncontroversial old statute enacted
during the two thousand and three Iraq War and claims
(10:42):
that it allows him to takes a very general term
waiver or modify provisions related to student loans, and claims
that modify encompasses essentially a wholesale change in the structure
of the student loan system, including for giving billions and
billions of dollars in debt. And the Supreme Court right
struck that down, and all of the reasoning of the
(11:03):
six justices who voted to strike that down applies just
as much, if not more here, And in fact, we
heard John Roberts, Chief Justice, who's been the biggest proponent
of the Major Questions doctrine, asking some pointed questions of
the Solicitor General about whether the Major Questions doctrine should
apply here as well. So I think all of that
reasoning that of all six justices who joined that student
(11:25):
Loan's opinion should lead them if they're being consistent to
strike down these tariffs.
Speaker 2 (11:31):
Let me ask you a little more about that, Thomas Berry,
particularly Justices A Leado who you corrected me on before,
and yes, absolutely was much more a sort of friendly
to the government's side, which I found interesting in Justice
Thomas who you know, he's been speaking a lot more
since COVID he didn't say a word for decades, then
(11:52):
suddenly started to ask questions, and the few questions he
asked were, we're not.
Speaker 1 (11:58):
So averse to this.
Speaker 2 (12:00):
Talk to me a little bit about how you view
the conservative justices and their interpretation what could be here,
especially from their questions, and whether they will or will not.
I mean, obviously I'm not asking you for crystal ball.
May or may not line up with what they concluded
in the student loans case that you just mentioned.
Speaker 4 (12:21):
Right, Alito definitely seemed to be on the administration side,
and it seems that to Aledo, the difference here is
the foreign policy aspect of this. Alito asked a lot
of pointed questions about what if we have, you know,
we're on the verge of a hot war with China,
or we have a hostage in a foreign hostile foreign
country like China that we're trying to use leverage to
(12:42):
get them out. Shouldn't the president have the maximum number
of tools at his disposal to put leverage on these
foreign countries to negotiate with them. So I'm guessing if Alito,
I hope, writes a dissent, not a majority opinion supporting
the government, he would argue that this is different from
the student loans case because statutes giving presidents negotiating power
(13:03):
with foreign countries should be interpreted more expansively given that
the way the separation of powers is designed, it is
understood that the president is the lead negotiator with foreign countries,
is the person who often makes quick decisions when an
emergency arises unexpectedly. Nonetheless, my response to that would be,
(13:26):
we have had two hundred years of presidents having many
tools at their disposal for leverage, but tariffs have never
been one of them. In terms of unilateral presidential policy making,
We've always relied on Congress to be the one to
spell out explicitly in statutes what the teriff rates are
going to be. So Congress really has always treated tariffs
(13:48):
as a different kind of thing because they're not just
foreign policy, they're also taxes on Americans.
Speaker 1 (13:54):
Now, that's a great point. Thomas Berry and I would
tend to agree.
Speaker 2 (13:59):
Although there's an argument from President Trump and his supporters
that the reason why Trump is using teriffs in this
way is because he views it as a negotiation tool
in a way that past presidents had not, and therefore
is justified in going about it in this way.
Speaker 1 (14:17):
How do you respond to that, Well.
Speaker 3 (14:20):
He's been a very erratic and unreliable negotiator here because
he keeps setting terms or claiming he comes to deals
with other countries, and then a week later he gets
mad at the prime minister of that other country or
government official. He gets mad because Canada runs a TV
ad quoting Ronald Reagan and decides that the deal is
off and he's going to change the rate. And I
(14:41):
think what this highlights is there's a deeper problem in
Trump's approach to IEPA. He likes IIPA because he can
change it on a whim with an executive order, but
that also means any in all of these deals that
he has claimed to have secured it with foreign countries
have no enforcement mechanism. They're not worth the paper that
they're written on, if they're even written on paper at all.
(15:02):
They're outside of the balance of the traditional way of
doing free trade agreements, which was there was a formal document,
an agreement drafted, and it was put before Congress, and
I think Congress would have to vote on it to
accept the terms of that agreement. Trump's done absolutely none
of that and is just relying on the perpetuity of
his own executive orders to keep these supposed deals in place.
Speaker 1 (15:24):
Well, you just got a few minutes left.
Speaker 2 (15:25):
I want to ask each of you a different final question,
a real quick film magnus. I'll throw it back to
you on the argument about trade imbalances and how they're
now viewed as a national emergency, and that is per
the arguments presented in court as well before the Supreme
Court this week, that this is part of the justification.
Is the trade imbalance that we have with a given
(15:47):
country a national security matter?
Speaker 3 (15:50):
It is absolutely not, and you would not be able
to find any credible mainstream economist who would support that proposition.
In fact, we've run trade desits for basically the last
fifty years. We've run trade deficits for as long as
i EPA has been in place, and never once until
Donald Trump invented this new power, did anyone try to
(16:10):
use IEPA to counter this supposed emergency and the economics
behind it. It just comes down to basically the presidents
in his team, they don't understand basic accounting in the
international arena. They only see goods and services coming in
or going out of the country. They don't look at
all the other financial instruments. People are not giving us
stuff for free, and they're not taking stuff away from us.
(16:32):
There's always an exchange. And if you do a full
accounting of what crosses borders by definition, it's like if
I were to pay my bill at the grocery store,
there's no trade deficit that occurs because I offer money
in return for goods or vice versus. Someone comes into
a store that I own and they give me money
for something that I give them as a physical product.
(16:52):
It actually comes out to a balance.
Speaker 2 (16:55):
Finally, appreciate that answer, Phil magnet So, Thomas A.
Speaker 1 (16:58):
Berry. Let me just ask you so briefly to talk
a bit about.
Speaker 2 (17:02):
The implications of what the Supreme Court might decide. How
do you think this may or may not go down,
and what could it mean for the long term, particularly
in so far as we consider presidential power.
Speaker 4 (17:16):
Sure well, I was in the audience during the Supreme
Court argument trying to predict the votes counted justices see
who's giving more skeptical questions. I counted at least five
votes that I think are leaning against the administration. The
three Democratic appointees plus Justices Gorsich and Barrett, and I
could definitely see Chief Justice Roberts voting against the administration
(17:37):
as well, given his interest in the major questions doctrine,
and perhaps Justice Kavanaugh, who seemed to be a genuine
swing vote. He seemed genuinely concerned and pained by both
sides and really deep in the weeds of some of
the precedents. So if I had to guess, I guess
somewhere between five and seven votes against the administration. But
a lot will depend on how they write the opinion.
Do they try to work through all of the implications
(17:59):
of how the refunds might work for every party in
the country, or do they simply say the named parties
in this case are entitled to a refund, will leave
it to the lower courts to deal with claims for
refunds by every other affected person. If I had to guess,
I would guess that they would do the latter. The
Supreme Court usually takes the approach of lessons more so
(18:21):
there's certainly going to be much more litigation to follow
no matter what. And of course, there are many other
statutes that President Trump may use, and has said he
probably sure to try to direct orff some more plausible
than others. So we're likely to have litigation not just
about IEPA, but about other statutes going forward.
Speaker 2 (18:40):
Ah years ahead of Supreme Court potentially or at least
legal arguments over different justifications for tariffs.
Speaker 1 (18:47):
Oh what joy. Thomas A.
Speaker 2 (18:49):
Berry, Director of the Cato Institute's Robert A. Levy Center
for Constitutional Studies, and Philip W. Magnus, Independent Institute Senior
Fellow and economic historian, thank you both so much for
your time, really interesting discussion and appreciate it today.
Speaker 3 (19:06):
Thanks for having us, Thanks for having us.
Speaker 1 (19:09):
Thank you both
To break it all down.
Speaker 2 (00:00):
I'm pleased to have two different guests on from two
vantage points to dive in.
Speaker 1 (00:06):
Philip W.
Speaker 2 (00:07):
Magnus is a senior fellow at the Independent Institute and
the David J. Throw Chair in Political Economy. He's been
a research fellow elsewhere, has been a prolific author of
several books as well. I'm also pleased to be joined
by Thomas A. Barry, director of the Robert A. Levy
(00:29):
Center for Constitutional Studies and the editor in chief of
the Cato Supreme Court Review. Gentlemen, welcome to KOA. It's
good to talk with you both.
Speaker 3 (00:40):
Absolutely thanks for having us, Yes, thanks for having me.
Speaker 1 (00:43):
Thank you both for coming on.
Speaker 2 (00:45):
So I will start with our legal expert for the beginning,
and that would be you, Thomas A.
Speaker 1 (00:52):
Barry.
Speaker 2 (00:52):
Can you break down for us, just if you boiled
it down, what the essence of this case is between
the two sides with the Trump administration is arguing in
the court and presented the other day, and what the
point of suing the federal government have said?
Speaker 4 (01:09):
Absolutely, well, thanks for having me, and if you'll permit
me one brief correction. That third voice we heard talking
about the accretion of presidential power was Neil Gorstich.
Speaker 1 (01:18):
Now, excuse Melito, thank you. I'm embarrassed he's from Colorado.
How could I?
Speaker 4 (01:23):
Gorstich was much more skeptical of the administration than Alito.
Speaker 1 (01:26):
Was true the argument, thank you for that clarification.
Speaker 4 (01:30):
In a nutshell, this is about, as you said, the
text of AIPA, whether it allows President Trump to impose
these tariffs that he started on so called Liberation Day
as he put it, which have varied quite a bit.
Not every tariff he's enacted is a part of this
challenge because the lawsuits were filed months ago, so some
(01:51):
of the newer ones might not be an issue, though
their legal grounding might be undermined as well, depending on
the reasoning the court issues. But i EPA, this nineteen
seventy statute essentially has a long list of verbs and
nouns that the president can do if he finds that
there's an extraordinary and unusual threat and he declares a
(02:13):
national emergency and he claims that he needs to take
this action to deal with it. So among all of
those very long list of verbs, some of them are
quite broad. For example, nullify, void, prevent or prohibit importation.
So the president can say, you know, no one can
(02:33):
import platinum or gold or type tungsten or whatever from
Vietnam or China or something like that. But the keyword
is among those verbs is regulate, so it says the
president can impose in order to regulate. And then among
those objects of the verbs is importation. And what the
(02:54):
administration is hanging its hat on completely is that if
you combine those two regulate and then put in ellips's
importation that includes tariffs. The tariffs are essentially a regulation
on importation, and that they were necessary to deal with
the extraordinary two threats through to national emergencies, one being
the importation of fentanyl and the other being the so
(03:16):
called trade imbalance with various countries. And the administration's main
argument that they've made repeatedly in oral arguments is that
they don't want these tariffs. The purpose of these isn't
to raise revenue. This is what they're claiming now, though
President Trump has said some things at odds with this,
but their legal argument now is the purpose of this
isn't to raise revenue. It's to provide leverage to change
(03:37):
change people's behavior, and that the hope is that either
other countries will stop the flow of fentanyl, and thus
we won't need the tariffs anymore. So essentially the punishment ends,
or that manufacturing will increase in the US, the trade
imbalance will go away, and the things that we were
importing just voluntarily won't be imported anymore, and once again
(03:58):
tariffs won't be imposed. The administration's argument, in a nutshell,
is that they're dealing with these two extraordinary threats by
regulating importation and in this and tariff's count as among
the things encompassed by the verb regulate.
Speaker 2 (04:15):
Let's talk for a moment, Philip Magnus about that aspect
of this idea of a regulatory terrorists versus revenue raising tariffs,
because that is part of the distinction that the administration
is addressing, per what Thomas Berry just told us, And
it's interesting to me to hear this at the same time,
(04:35):
phil that the administration, particularly President Trump, has been touting
all kinds of revenue coming into the federal government. Look
how much money we've made in America from these tariffs.
Speaker 1 (04:46):
But before the Supreme Court, now, no, this.
Speaker 2 (04:49):
Is about regulatory terrorists, not about making money.
Speaker 3 (04:52):
Right right, So Trump has actually contradicted in footplop several
times on this particular point, including some of his own
court filings, and certainly is Economic advisors public documents that
they've released. Trump has been teuting that these tariffs, the
i EPA tariffs that are being challenged right now, are
projected to raise between about two point eight and four
(05:13):
trillion dollars in new tax revenue over the next decade.
And even as his lawyers are arguing this before the court,
the White House is tweeting out media eclipse of President
Trump bragging about all the revenue that's coming in even
an internal contradiction and messaging here, although one of them
they're arguing for illegal reason because they think if the
(05:33):
court accepts these tariffs as regulatory powers, they'll be granted
more deference in the leeway in the international arena. The
reason being that the tax power is so explicitly tied
to what Congress does in Article one, even though that's
as where the commerce regulation power comes from. But the
tax power itself is fundamentally seen as something that our
(05:54):
representatives in an elected body are supposed to have direct
and exclusive oversight on. So Trump wants to run away
from the tax claims in court even while he's making
them in public.
Speaker 1 (06:06):
And kind of dovetailing in with that.
Speaker 2 (06:08):
I want to ask you real quick of Phil Magnus,
because you were tweeting about this on x as well,
going back into the early mid well still pretty early
eighteen hundreds, during the nullification crisis, and you had the
debate that was going on there and some things you
were pointing out about John C. Calhoun, who's a former
(06:30):
Vice president of the United States, the seventh Vice president
of the United States. Talk to us a little bit
about what you're noticing from the Solicitor General that would
be the Trump administration's lawyer, John Sower, and what he
argued to the Supreme Court and John C.
Speaker 1 (06:45):
Calhoun from two hundred years ago.
Speaker 3 (06:48):
Well, that's the interesting thing. We've had all of these
arguments play out before it goes back to the earliest
days of the Republic. Because James Madison, basically the main
figure in the design of the Constitution and the main
record keeper at the Convention, introduces the first tariff bill
in seventeen eighty nine, and in his opening speech he says,
this tariff achieves two things. One is it raises revenue
(07:12):
to it regulates commerce and Madison's point was that tariffs
are actually a joint exercise of these two powers under Congress.
They are both taxes and regulation. And for your economic
followers out there, we also know that the economics of
tariffs work in this exact way. You put a tax
(07:32):
in place, it raises revenue, but it also discourages importation
at the same time thereby regulating it. So it's a
simultaneous exercise of these powers. Well, John C. Calhoun in
eighteen twenty eight, the US Congress passed something referred to
as the Tariff of Abominations. It was an extremely high
protective tariff following the philosophy of Henry Clay to basically
(07:57):
wall off America from foreign competition to protect our industries.
And Calhoun basically made the same argument. He says, this
is a regulatory tier if this is not a revenue tariff,
even though it was listed as the Revenue Act of
eighteen twenty eight. But Calhoun's point was, you can only
pick one of these two clauses at a time. It's
(08:17):
either a revenue tariff or a regulatory tariff. And he
had further arguments. He said that if this is a
regulatory tariff, it's unconstitutional because it doesn't fulfill the tax power.
Madison is still alive in this time, and he's still
writing commentaries on these debates to his friends and close associates,
and we have several letters from him. Madison rebukes essentially
(08:38):
the Calhoun position. He says, no, these are joint powers
exercise simultaneously, because every tariff does both things. It raises
revenue and it regulates commerce.
Speaker 2 (08:49):
And quite honestly, I would choose the words of the
father of the Constitution over John C. Calhoun, and particularly
on that one. Again, we're joined by Philip Magnus, who
was an economic historian, and by constitutional scholar Thomas Barry.
And Thomas, I want to come back to you because
one of the things that I've noticed, and I think
(09:09):
you've observed this too, is that President Trump's administration has
been searching around what's the legal justification we can find
for the broadest tariffs possible. We saw a similar thing
with Joe Biden and his presidency on things like in
particular the student loans issue.
Speaker 1 (09:29):
Can you speak to that?
Speaker 2 (09:30):
And presidents looking for a legal justification for their chosen
expansions of presidential authority.
Speaker 4 (09:39):
Yeah, that's exactly right. And this is the reason why
the Supreme Court has, over the last decade or so,
developed named doctrine. It's come to be called the Major
Questions doctrine. And it gets that a common sense idea,
which is that if the president starts with a policy
goal in mind, and he President Trump very much had
that goal in mind. He wanted tariffs, he made that
clear before he was elected. If he starts with a
(10:01):
policy goal in mind and then goes hunting for an
old statute to enact it because he can't get Congress
to give him what he wants, you should be more
skeptical about whether that legal argument is correct, especially if
that old statute has been around for a while but
has never been used in the way that the president
is now using it. So we saw this playout under
(10:22):
President Biden with student loan forgiveness. This was a major
issue in the twenty twenty election. He had a lot
of pressure from his base to an act student loan forgiveness.
Bills were introduced in Congress, but none of them could
get passed. So he uses an uncontroversial old statute enacted
during the two thousand and three Iraq War and claims
(10:42):
that it allows him to takes a very general term
waiver or modify provisions related to student loans, and claims
that modify encompasses essentially a wholesale change in the structure
of the student loan system, including for giving billions and
billions of dollars in debt. And the Supreme Court right
struck that down, and all of the reasoning of the
(11:03):
six justices who voted to strike that down applies just
as much, if not more here, And in fact, we
heard John Roberts, Chief Justice, who's been the biggest proponent
of the Major Questions doctrine, asking some pointed questions of
the Solicitor General about whether the Major Questions doctrine should
apply here as well. So I think all of that
reasoning that of all six justices who joined that student
(11:25):
Loan's opinion should lead them if they're being consistent to
strike down these tariffs.
Speaker 2 (11:31):
Let me ask you a little more about that, Thomas Berry,
particularly Justices A Leado who you corrected me on before,
and yes, absolutely was much more a sort of friendly
to the government's side, which I found interesting in Justice
Thomas who you know, he's been speaking a lot more
since COVID he didn't say a word for decades, then
(11:52):
suddenly started to ask questions, and the few questions he
asked were, we're not.
Speaker 1 (11:58):
So averse to this.
Speaker 2 (12:00):
Talk to me a little bit about how you view
the conservative justices and their interpretation what could be here,
especially from their questions, and whether they will or will not.
I mean, obviously I'm not asking you for crystal ball.
May or may not line up with what they concluded
in the student loans case that you just mentioned.
Speaker 4 (12:21):
Right, Alito definitely seemed to be on the administration side,
and it seems that to Aledo, the difference here is
the foreign policy aspect of this. Alito asked a lot
of pointed questions about what if we have, you know,
we're on the verge of a hot war with China,
or we have a hostage in a foreign hostile foreign
country like China that we're trying to use leverage to
(12:42):
get them out. Shouldn't the president have the maximum number
of tools at his disposal to put leverage on these
foreign countries to negotiate with them. So I'm guessing if Alito,
I hope, writes a dissent, not a majority opinion supporting
the government, he would argue that this is different from
the student loans case because statutes giving presidents negotiating power
(13:03):
with foreign countries should be interpreted more expansively given that
the way the separation of powers is designed, it is
understood that the president is the lead negotiator with foreign countries,
is the person who often makes quick decisions when an
emergency arises unexpectedly. Nonetheless, my response to that would be,
(13:26):
we have had two hundred years of presidents having many
tools at their disposal for leverage, but tariffs have never
been one of them. In terms of unilateral presidential policy making,
We've always relied on Congress to be the one to
spell out explicitly in statutes what the teriff rates are
going to be. So Congress really has always treated tariffs
(13:48):
as a different kind of thing because they're not just
foreign policy, they're also taxes on Americans.
Speaker 1 (13:54):
Now, that's a great point. Thomas Berry and I would
tend to agree.
Speaker 2 (13:59):
Although there's an argument from President Trump and his supporters
that the reason why Trump is using teriffs in this
way is because he views it as a negotiation tool
in a way that past presidents had not, and therefore
is justified in going about it in this way.
Speaker 1 (14:17):
How do you respond to that, Well.
Speaker 3 (14:20):
He's been a very erratic and unreliable negotiator here because
he keeps setting terms or claiming he comes to deals
with other countries, and then a week later he gets
mad at the prime minister of that other country or
government official. He gets mad because Canada runs a TV
ad quoting Ronald Reagan and decides that the deal is
off and he's going to change the rate. And I
(14:41):
think what this highlights is there's a deeper problem in
Trump's approach to IEPA. He likes IIPA because he can
change it on a whim with an executive order, but
that also means any in all of these deals that
he has claimed to have secured it with foreign countries
have no enforcement mechanism. They're not worth the paper that
they're written on, if they're even written on paper at all.
(15:02):
They're outside of the balance of the traditional way of
doing free trade agreements, which was there was a formal document,
an agreement drafted, and it was put before Congress, and
I think Congress would have to vote on it to
accept the terms of that agreement. Trump's done absolutely none
of that and is just relying on the perpetuity of
his own executive orders to keep these supposed deals in place.
Speaker 1 (15:24):
Well, you just got a few minutes left.
Speaker 2 (15:25):
I want to ask each of you a different final question,
a real quick film magnus. I'll throw it back to
you on the argument about trade imbalances and how they're
now viewed as a national emergency, and that is per
the arguments presented in court as well before the Supreme
Court this week, that this is part of the justification.
Is the trade imbalance that we have with a given
(15:47):
country a national security matter?
Speaker 3 (15:50):
It is absolutely not, and you would not be able
to find any credible mainstream economist who would support that proposition.
In fact, we've run trade desits for basically the last
fifty years. We've run trade deficits for as long as
i EPA has been in place, and never once until
Donald Trump invented this new power, did anyone try to
(16:10):
use IEPA to counter this supposed emergency and the economics
behind it. It just comes down to basically the presidents
in his team, they don't understand basic accounting in the
international arena. They only see goods and services coming in
or going out of the country. They don't look at
all the other financial instruments. People are not giving us
stuff for free, and they're not taking stuff away from us.
(16:32):
There's always an exchange. And if you do a full
accounting of what crosses borders by definition, it's like if
I were to pay my bill at the grocery store,
there's no trade deficit that occurs because I offer money
in return for goods or vice versus. Someone comes into
a store that I own and they give me money
for something that I give them as a physical product.
(16:52):
It actually comes out to a balance.
Speaker 2 (16:55):
Finally, appreciate that answer, Phil magnet So, Thomas A.
Speaker 1 (16:58):
Berry. Let me just ask you so briefly to talk
a bit about.
Speaker 2 (17:02):
The implications of what the Supreme Court might decide. How
do you think this may or may not go down,
and what could it mean for the long term, particularly
in so far as we consider presidential power.
Speaker 4 (17:16):
Sure well, I was in the audience during the Supreme
Court argument trying to predict the votes counted justices see
who's giving more skeptical questions. I counted at least five
votes that I think are leaning against the administration. The
three Democratic appointees plus Justices Gorsich and Barrett, and I
could definitely see Chief Justice Roberts voting against the administration
(17:37):
as well, given his interest in the major questions doctrine,
and perhaps Justice Kavanaugh, who seemed to be a genuine
swing vote. He seemed genuinely concerned and pained by both
sides and really deep in the weeds of some of
the precedents. So if I had to guess, I guess
somewhere between five and seven votes against the administration. But
a lot will depend on how they write the opinion.
Do they try to work through all of the implications
(17:59):
of how the refunds might work for every party in
the country, or do they simply say the named parties
in this case are entitled to a refund, will leave
it to the lower courts to deal with claims for
refunds by every other affected person. If I had to guess,
I would guess that they would do the latter. The
Supreme Court usually takes the approach of lessons more so
(18:21):
there's certainly going to be much more litigation to follow
no matter what. And of course, there are many other
statutes that President Trump may use, and has said he
probably sure to try to direct orff some more plausible
than others. So we're likely to have litigation not just
about IEPA, but about other statutes going forward.
Speaker 2 (18:40):
Ah years ahead of Supreme Court potentially or at least
legal arguments over different justifications for tariffs.
Speaker 1 (18:47):
Oh what joy. Thomas A.
Speaker 2 (18:49):
Berry, Director of the Cato Institute's Robert A. Levy Center
for Constitutional Studies, and Philip W. Magnus, Independent Institute Senior
Fellow and economic historian, thank you both so much for
your time, really interesting discussion and appreciate it today.
Speaker 3 (19:06):
Thanks for having us, Thanks for having us.
Speaker 1 (19:09):
Thank you both
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