Constitutional Opinions

Beer on Tap

By From the September 2012 issue

THIS IS A DECIDEDLY MINORITY OPINION, but the case with the biggest potential impact before the federal courts this year is not the saga of Obamacare. There’s no gainsaying that Obamacare was an important case, and it’s hard to sugarcoat the majority opinion vouchsafing the power of Congress to impose a mandate for health insurance via the taxing power. But what does one figure that will impact—5 percent of Americans? Twenty? Twentyfive? How about a case that has, if only on the ricochet, the potential to impact everyone who uses American money?

Welcome to Beer v. United States, a lawsuit brought by a rainbow coalition of some of the most distinguished judges on the federal bench. They are suing—in their own court system—for a raise in their pay. They contend that when Congress suspended an automatic pay increase previously legislated to protect the judges against inflation, it violated the Constitution—specifically, the diminishment clause, which says that the compensation for federal judges “shall not be diminished during their Continuance in Office.”

I’ve touched on this in these pages before (“Who’s Afraid of America’s Constitution?” TAS, March 2011), but the case will reach a critical stage in September, when the United States Court of Appeals for the Federal Circuit, with all the judges sitting en banc, is scheduled to hear arguments. It’s already been to the Supreme Court, which remanded it and asked the circuit court to clarify certain procedural points. If the brief filed on behalf of the judges is any indication, the circuit is going to be rubbering right down to where the American revolutionaries were eyeball-to-eyeball with George III. It is conceivable that it could end up at the Supreme Court again.

What excites me about the case is the chance that the judges could end up confronting the constitutionality of our fiat currency. It’s a slim chance, I’ll warrant, but if there were a slim chance that someone could, say, tame thermonuclear fusion, it would be something that would merit attention.

The key to Beer is that judges’ pay is unique under our Constitution in that it can never be lowered. This is because of the a buses of the British tyrant George III. So sensitive were the Founders on the point that they made judges’ pay one of the enumerated grievances in the Declaration of Independence. The Declaration complained that George III had made judges “dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.” Hence the diminishment clause. Congress may raise a judge’s pay, but may not cut it, so long as the judge is on the bench. It is American bedrock.

Things perked along well enough in the first two centuries of constitutional government in America. Then, in 1971, President Nixon closed the gold window and declared, “We’re all Keynesians now.” Congress precipitated America into the era of fiat money. The value of the dollars with which America was paying its judges—and everyone else—promptly collapsed. Under Bretton Woods, a dollar had been redeemable among governments for a 35th of an ounce of gold. By the late 1970s, it was not worth a tenth of what it had been before the socalled “Nixon shock.” The value of a dollar had plunged to just under a 393rd of an ounce of gold by November 26, 1979.

That’s the date on which Peter Beer was confirmed by the Senate as a United States district judge in Louisiana. At the time, district judges were paid an annual salary with a total value of 156.5 ounces of gold. In subsequent years, that value gyrated, falling, then rising as the dollar under the Reagan-Volcker regime gained strength. By 1989, a judge of Beer’s rank was being paid a salary worth 219 ounces of gold. That was the year Congress passed an ethics reform act establishing automatic pay adjustments designed to keep the judges almost abreast of inflation.

TODAY, A FEDERAL DISTRICT JUDGE earns a salary that, at $174,000, has been diminished to a scant 110 ounces of gold—less than half the 242 ounces a federal district judge was making in, say, 1900, the year Congress definitively decided to define the dollar in terms of gold rather than silver. As a matter of policy, the pay of judges is paltry compared to what they could make off the bench. The chief justices of the United States, most recently John Roberts, have long warned of the consequences low pay could have on the ability of the judicial branch to meet its responsibilities.

Beer, however, is not being argued as a problem of policy but rather as a question of constitutional law. It may be that, as the case wends its way to a conclusion, the court will decide that suspending a promised increase for a judge is not the same as diminishing the judge’s pay. Or it may decide that Congress must keep its promise. But it’s also possible to imagine the courts going further and opening up the question—referenced in the brief filed by the federal judges—of how the Founders thought about money.

If the court does that, it will confront a record in which the Founders clearly view money in terms of silver and gold. Once there, the judges will be aghast at how much diminishment they themselves have suffered just in the last few years. Rectifying the violation would cost a pretty penny—my own quick estimate is that to repair the damage for the 874 Article III judges alone would cost something on the order of an F-35 fighter jet each year. But is that an unreasonable price to salvage one of the primary branches of our constitutional system? Judge Beer himself could end up making something like $343,000. Not unreasonable for a federal judge.

The potential significance of the case isn’t the judges, though. It’s the invitation to the high court to think about money in a constitutional way—to step back and take a fundamental look at the dollar. The record is clear that the constitutional authors viewed with horror the idea of fiat, paper money. If the debasement of American money is devastating the judiciary, moreover, imagine what it is doing to the rest of America. Beer offers a chance for the courts to look at the Constitution’s monetary powers the way they looked at, say, the First Amendment in Citizens United, the campaign spending case, or the Second Amendment in Heller, the historic gun control case. It’s a chance for the Court to get past the hemming in Obamacare.

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About the Author

Seth Lipsky, founding editor of the New York Sun, is the author of The Citizen's Constitution: An Annotated Guide (Basic Books).