Former federal appellate judge Michael McConnell, now a professor at Stanford, argues that the “Pay Czar” is unconstitutional. Specifically, he argues that the “Pay Czar,” aka the Treasury Department’s “Special Master” for executive compensation, is an “officer” of the United States for purposes of the Appointments Clause (albeit likely an inferior officer) because he is an “appointee exercising significant authority pursuant to the laws of the United States.” Article II, section 2 of the Constitution provides in relevant part:
He [the President] . . . by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.
Under this provision, all officers must either be nominated by the President and confirmed by the Senate with one exception. Congress may vest the power of appointment of an inferior officer in the President or a “Head of Department.” It did not do so here. As a consequence, the “Pay Czar” cannot exercise “significant authority pursuant to the laws of the United States,” such as the authority to set executive compensation levels for TARP recipients . Congress delegated this authority to the Treasury Secretary. While the Secretary may sub-delegate this authority, he may only do so to a duly appointed officer of the United States, and the “Pay Czar” does not qualify.
McConnell concludes:
The Supreme Court observed in Buckley v. Valeo that the provisions governing appointments under the Constitution reflect more than “etiquette or protocol.” They embody the Founders’ conviction that all power under U.S. laws must be exercised by officers with constitutional authority.
The Founders understood that the president and heads of the executive departments could not single-handedly carry out the law, so they required Senate confirmation as what the Federalist Papers call “an excellent check” on abuse or favoritism by the president. Yes, there are some offices so inferior that this check may be eliminated—but it is for Congress to judge which ones these may be. Congress and Congress alone has power to dispense with the safeguard of the confirmation process.
The power to set compensation at large American businesses is especially subject to potential abuse, favoritism, arbitrariness, or political manipulation. It is no reflection on Kenneth Feinberg, who has a sterling reputation and who appears to have approached these sensitive duties with a spirit of commendable integrity, to say that the checks and balances of the Constitution should be scrupulously observed. They were not. Because he is not a properly appointed officer of the United States, Mr. Feinberg’s executive compensation decisions were unconstitutional.
Steve says:
A sterling reputation? His nickname is “the Snake”!
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October 30, 2009, 10:34 amSoronel Haetir says:
Could an argument be made that he is exercising power other than that of the laws of the United States?
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October 30, 2009, 10:57 amA.S. says:
There is no doubt that Mr. Feinberg is an “officer” of the United States. The Supreme Court has defined this term (Buckley v. Valeo, 1976) as “any appointee exercising significant authority pursuant to the laws of the United States.” Mr. Feinberg signed last week’s orders setting pay levels for executives at Bank of America, AIG, Chrysler Financial, Citigroup, GMAC, General Motors and Chrysler. They have the force of law and are surely an exercise of “significant authority” pursuant to an Act of Congress.
Anytime you see the word “surely” in an article like this, that’s the first thing to be skeptical of. Is setting the pay limit (not the pay itself, just the limit) for a couple of hundred individuals is “significant authority”? I am not so sure.
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October 30, 2009, 11:03 amruuffles says:
Unfortunately, really, since he went private because his name was crossed off the SCOTUS short list for a single opinion that strayed from conservative orthodoxy. Otherwise he might actually have a chance to weigh in.
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October 30, 2009, 11:04 amUgh says:
Anytime you see the word “surely” in an article like this, that’s the first thing to be skeptical of.
not to mention that it’s an Op-Ed published in the WSJ.
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October 30, 2009, 11:06 amp.d. says:
Would you prefer he went through the 3–6 month law review editing process to assert his opinion on a timely matter? What other forum would grant him more credibility?
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October 30, 2009, 11:10 amAndrew Lazarus says:
Than another anti-Obama WSJ op-ed? Flyers tacked on phone poles, for a start.
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October 30, 2009, 11:16 amShelbyC says:
Are you saying that he shouldn’t call you Shirley?
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October 30, 2009, 11:18 amtmac says:
“What other forum would grant him more credibility?”
The Daily Kos, obviously.
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October 30, 2009, 11:24 amDave N says:
I had forgotten that Michael McConnell had resigned from the bench. It seems the University of Utah College of Law has forgotten that he had resigned from their faculty.
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October 30, 2009, 11:33 amJKB says:
Any action by a federal employee or constitutional officer must be authorized by the Constitution or enacted law. The private sector can act in any way not prohibited by law but the government can only act as authorized. Authorizing and appropriation laws are how Congress delegates its power to the Departments for them to take some action.
In this case, it appears the Pay Czar should not be issuing pay cap regulation under his own signature but rather the pay cap rule should be signed by the legislatively authorized official, the Treasury Secretary. What the op-ed is stating that either this must happen or the Pay Czar must be an officer of the United States and is subject to confirmation in order to issue the rule directly.
The confirmation doesn’t have to be a big deal. Military officers are confirmed all the time appearing before the Senate as nothing more than a name on a list. So are many minor subordinate officer positions in the Departments. Of course, at anytime the Senate, at their discretion, can exercise more investigative procedures before confirming the officer.
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October 30, 2009, 11:40 amBrian G. says:
If Bush has nominated him, the pay czar would not only be unconstitutional, he would be the prime example of Bush’s rampant disregard of the Constitution and a reason to impeach Bush.
But since it is Obama’s guy, he is perfectly constitutional and any concerns raised by the far radical right are nothing more than racism against Obama.
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October 30, 2009, 11:57 amMark Field says:
Yes.
Pretty much any other forum would have more credibility than the WSJ editorial page. The back of a cereal box comes to mind, though posters on telephone polls would be good.
Well, Kos does seem to have higher standards than the WSJ editorial page. Not that that’s much of a test.
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October 30, 2009, 12:06 pmShelbyC says:
You might be making the other side’s case here. Don’t the limits apply to tens of thousands of individuals?
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October 30, 2009, 12:20 pmMartinned says:
If Bush nominated him, this wouldn’t only be an example of liberals fleeing to the courts, but also a prime example of liberal judicial activism across the board.
But since it is Obama’s guy, conservatives are perfectly allowed to drag in the constitution whenever the president does something they don’t like.
Don’t get me wrong, I don’t really have an opinion on this one. It’s just that it strikes me as a prime example of post Jan-20 role reversal.
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October 30, 2009, 12:22 pmB.D. says:
Oh no, not the big bad WSJ! Never mind that this piece was written by a law professor and former federal appellate judge. Rupert Murdoch must have had something to do with this!
Or was it Karl Rove?
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October 30, 2009, 12:49 pmShelbyC says:
I’m sure many folks have no doubt that Glen Beck was moving the hand that held the pen.
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October 30, 2009, 12:58 pmJonathan H. Adler says:
Michael McConnell is one of the foremost constitutional law scholars of his generation. I find it odd (and somewhat disappointing) that so many folks are so quick to dismiss his argument because of where it was published.
(I would also note that the WSJ op-ed page is no longer a one-sided affair. While the unsigned editorials are consistently conservative, the op-ed page regularly publishes articles propounding alternate views, including frequent pieces by Administration officials and Democratic politicians.)
JHA
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October 30, 2009, 1:07 pmruuffles says:
Yet he was quickly taken off W.‘s short-list for SCOTUS because of one opinion he wrote that exposed police officers to lawsuits. Just sayin’
[And that says far more about the Bush Administration than it does about McConnell. — JHA]
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October 30, 2009, 1:35 pmPlugInMonster says:
If you took TARP money you have no business complaining about pay czars, goes with the territory. What you thought it was “no strings attached”? Now if they suddenly start going after other company CEO pay, then sign me up for the 2nd American Revolution.
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October 30, 2009, 1:39 pmDave N says:
Mark Field doesn’t like the WSJ editorial page because it conflicts with his world view. Sorry Mark, such ad hominems only weaken your own credibility.
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October 30, 2009, 1:40 pmMark N. says:
It seems if this view were taken seriously, quite a few officers in the administrations of the last few presidents would be unconstitutional: anyone in the Executive Office of the President with any significant authority who was not confirmed.
For example, neither Bush’s nor Obama’s “religion czars”, who control disbursement of millions of dollars of grants “pursuant to the laws of the United States”, were confirmed by Congress, under the theory (initiated by Bush, and adopted by Obama) that the President has extensive leeway in controlling the internal organization of the Executive Office of the President, including creating new departments and appointing their heads without confirmation.
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October 30, 2009, 1:46 pmMark Field says:
This sounds nice in theory, but I don’t think you really believe it in real life. If I showed up to court in a clown costume, I can’t really expect the judge to take my argument seriously.
The WSJ editorial page (indeed, any editorial page) is not the place where people make serious legal arguments. It’s a place where they express opinions. In the particular case of the WSJ, it’s a place where they express conservative opinions (your second paragraph to the contrary notwithstanding). Thus, to publish there a “legal” argument is, as we all understand, to criticize the Administration rather than to offer serious legal analysis.
It’s more accurate to say that I don’t respect the WSJ editorial page. It’s one of the greatest purveyors of falsehoods in the US.
I’m perfectly happy to read conservative opinions (I hang out here, after all). The WSJ is entitled to its opinions. It’s not entitled to its own facts.
The WSJ is genus homo?
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October 30, 2009, 1:53 pmSuperSkeptic says:
Art. II, Section 2 is vague; but the fact that we colloquially refer to these people as “czars” in the exercise of their extensive “powers” under the United States Constitution, while not making them “surely” unconstitutional, certainly makes them constitutionally questionable. I am in favor of asking more pointed questions on the matter.
Ultimately, SCOTUS will have to tell us what they want to allow to go on, which of course, depends partially on the efficiency of these czars and whether or not SCOTUS approves of their actions. So we’ll see...
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October 30, 2009, 2:02 pmAndrew Hyman says:
The WSJ seems like a fine place for Judge McConnell’s column. After all, wasn’t he giving a big hint to a certain subset of WSJ readers who work on Wall Street and may be seeing much smaller paychecks very soon?
UVA law professor John Harrison says of the “czars” that their “practical authority . . . is not legal authority, and as long as the distinction is rigorously maintained there will be no legal problem.” Therefore, the question is whether Feinberg’s advice has been reviewed and approved by Geithner, IMHO.
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October 30, 2009, 2:45 pmwolfefan says:
I’ve admired McConnell for years because of his very public argument that the SCOTUS blew it in Bush v. Gore. I suspect that he was probably off of GW Bush’s short list before GW Bush was inaugurated,
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October 30, 2009, 3:19 pmmls says:
I think Andrew Hyman is right. If Feinberg himself is exercising the authority to set people’s pay (even if it is just a handful of people), he is an officer of the US and has to be appointed in accordance with the Appointments Clause. The only argument to circumvent that would be that he is not actually exercising any authority (notwithstanding the fact that everyone in the world thinks he is), and is merely making “recommendations” to Geithner.
If that is the argument, it illustrates the problem with the idea of “czars” who just give advice and recommendations.
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October 30, 2009, 3:32 pmMartinned says:
Absolutely, but what about the White House Chief of Staff? He probably has more power than most (all?) members of the cabinet.
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October 30, 2009, 3:48 pmTalkingHead says:
If Feinberg himself is taking these final actions, i.e. he has legal authority, he is indeed an officer. In such a case, he is subject to the Appointments Clause (and its excepting provision) and McConnell’s criticism is spot on. On the other hand, you could imagine a special master for compensation as simply making recommendations (albeit, highly influential ones) to the Secretary of Treasury who then elects to adopt those recommendations and who then uses his legal authority to make the pay cuts actionable. If this latter scenario obtains, Feinberg isn’t an officer. In fact, if Geithner wants to avoid any further legal controversy, he could accept Feinberg’s determination as merely recommendations that he is electing to adopt. That would silence any appointments objection.
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October 30, 2009, 4:07 pmTwirlip says:
Obviously, not a “legitimate news source” like the NYT.
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October 30, 2009, 4:25 pmDotar Sojat says:
Thomas Frank (as a Kansas resident I can vouch that he doesn’t really know jack about Kansas) appears in the WSJ. I’m sure that the lefties dismiss him as a tool for doing so.
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October 30, 2009, 4:26 pmTwirlip says:
But the people in question are not “advising”. Setting the pay scales for individuals employed in the private sector is not “advising”. Obama’s “czars” are wielding executive power, indeed power not even granted to the executive at all, or even to the government.
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October 30, 2009, 4:31 pmDon de Drain says:
Keep on the lookout for the issuance of an opinion from the Tax Court on an interesting Appointments Clause issue that could shed some light on the issue addressed in the WSJ piece. No, that was not a typo. The Tax Court. I filed an amicus brief in the case as the head of the Appellate Tax Clinic at Chapman Law School. (I’m an adjunct prof.) The case has been under submission since spring of this year.
I am busy with work right now and don’t have time to do a detailed post, but my initial reaction is that there is a potential Appointments Clause problem. Based on my recollection of the case law, though, my sense is that courts go out of their way to to minimize the effect of a violation of the Appointments Clause. And fixing the problem may not be very difficult.
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October 30, 2009, 4:32 pmTwirlip says:
In fact, if Geithner wants to avoid any further legal controversy, he could accept Feinberg’s determination as merely recommendations that he is electing to adopt. That would silence any appointments objection.
Thanks for that suggestion as to how the Obama administration can try to skirt its legal difficulties. Clearly government ethics is a burning concern for you.
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October 30, 2009, 4:33 pmTwirlip says:
There is nothing “conservative” about the arguments being advanced here. Unless your notion of “conservative” is “anything which obstructs the power of the Democrat in office”, regardless of what you would think of the same actions with a Repubican in office. Which does seem to be the case.
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October 30, 2009, 4:39 pmConnecticut Lawyer says:
Two interesting questions are presented.
1) Why doesn’t Geithner just adopt the recommendations of Feinberg and issue them under his signature? That would eliminate the constitutional issue since it would reduce Feinberg’s role to that of advisor, rather than executive officer. My guess is that the Administration doesn’t want to do that because Geithner is a political figure while Feinberg has a reputation as a non-partisan, technical type, and they want to piggy back on his reputation.
2) Why doesn’t the Administration submit Feinberg to the Senate for confirmation (changing the statute creating the post if necessary)? My guess is that although Feinberg would certainly be confirmed, the Administration fears a confirmation hearing would become a public hearing on the merits of federal regulation of executive compensation, and they don’t want a public hearing on that.
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October 30, 2009, 4:59 pmHans Bader says:
I am amazed by some of the comments above, which ignore that McConnell’s op-ed is based on Supreme Court rulings — including fairly recent bipartisan rulings — in which the Supreme Court took the Appointments Clause of the Constitution seriously.
If a mere federal district court clerk has enough power to be an officer of the United States subject to the Appointments Clause — as the courts long ago held — how on Earth can the pay czar not be?
This is not a partisan or ideological issue. Liberal justices like Blackmun took the Appointments Clause as seriously as conservative ones like Rehnquist.
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October 30, 2009, 5:03 pmConnecticut Lawyer says:
Not to put too fine a point on it, but the import of my comment above is that the Administration chooses unconfirmed czars over Senate-confirmed officers precisely to avoid the political costs of confirmation. Which is exactly why the Constitution requires confirmation for those posts, to force the President to bear the political costs of his policies.
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October 30, 2009, 5:03 pmfirst history says:
Shelby C sez:
Don’t the limits apply to tens of thousands of individuals?
The limits apply to the 25 top earners of the seven companies receiving TARP funds that haven’t returned the funds.
Remember the Golden Rule: He who has the gold makes the rules.
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October 30, 2009, 6:02 pmRyan Waxx says:
I don’t find it a bit odd. Remember — news that is inconvenient to the left is not real news. Anyone caught disseminating news that is not real news is to be silenced if possible... ignored if silencing is not possible.
This is a pattern, and not a particularly well-hidden one.
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October 30, 2009, 6:08 pmHoward Bowman, MD says:
Just what legal justification is there for the government to abrogate presumably legal binding contracts?
Oh, wait...they already do that — the whole bailout.
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October 30, 2009, 6:35 pmMark Field says:
My comment had to do with the WSJ editorial page. It leans right; I assume there’s no dispute about this.
As for the specific case of McConnell’s argument, on its face, you’re right — the argument is neutral as between Rs and Ds. The fact that it’s being made now (and in the context of a number of similar conservative arguments over the last few months), despite the fact that such “czars” have existed for at least 30 years, is kind of a hint.
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October 30, 2009, 7:13 pmDave N says:
Um, George W. Bush named Michael McConnell to the 10th Circuit. If he was on the President’s sh*t list, he would never have become an appellate judge in the first place.
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October 30, 2009, 7:23 pmpireader says:
I have sympathy for Judge McConnell. It’s hard to cram a rigorous argument on a complicated subject into an 800 word op-ed. So let’s read him generously.
The statutes authorize Secretary Geithner or his delegate to issue these pay mandates. And they generally authorize the secretary to delegate his authority in an area to any Treasury officer or employee. Which he has, in this area, to Mr Feinberg.
Congress might have stipulated that the secretary can only delegate that particular authority to a Senate-confirmed presidential appointee. But it didn’t.
So Judge McConnell’s issue seems to be that Congress authorized the TARP program but never explicitly created Mr. Feinberg’s office. And he apparently believes that Congress must explicitly create an office before Mr Geither can fill it.
In many cases, Congress creates an agency or office, and its head, explicitly by statute. But there’s a long history of presidents and cabinet secretaries creating offices, bureaus, etc. within the executive departments to perform functions authorized by Congress; and then appointing heads to those offices.
Apparently Judge McConnell is denying that tradition’s constiututionality ... in which case, I wish he’d explained why he thinks that.
Or have I mis-read him?
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October 30, 2009, 7:33 pmloki13 says:
But.... but..... Clinton! *sigh*
I love the WSJ. I think that their news and business reporters are some of the best in the business. Their op-ed page, on the other hand, isn’t suitable for wrapping a dead fish.
I agree with Mark Field; whatever the merits of McConnell’s arguments (and I would like to see him flesh it out in a real, scholarly settting if he’s serious), I find the forum and the timing do quite a bit to detract from his credibility.
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October 30, 2009, 8:15 pmpireader says:
loki13 –
Your dispute is with Twirlip.
The remark you’ve quoted is from him (at 4:25 pm), not from me.
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October 30, 2009, 9:18 pmloki13 says:
Pireader,
You are correct. I apologize. I blame everyone (especially the quoting software) except myself. You know, like a good liberal. :)
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October 30, 2009, 9:55 pmJohn Moore says:
What an odd point of view. It implies that an editorial cannot contain serious legal points, because it is an editorial?
I suspect this is more of a case of dislike of the WSJ editorial page because it is one of the few conservative editorial pages out there.
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October 31, 2009, 12:19 amJohn Moore says:
COMMISSARS, NOT CZARS!
Get the terminology right, folks!
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October 31, 2009, 12:20 amMartinned says:
As opposed to the right, who would never dismiss an article off hand based on where it was published?
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October 31, 2009, 10:11 amArthurKirkland says:
I not only dispute that point, but would wager good money that a number of those who frequent this site (including, perhaps, one or two of the Conspirators) believe the Wall Street Journal to be a commie-infested, left-leaning affront to our Nation, Christian values and the true conservative cause.
I believe a recent poll indicated that roughly 15 percent of Americans describe Fox as “mostly liberal” and that approximately 10 percent describe MSNBC as “mostly conservative.” I’m not sure I want to know too much about the perspective or thought process that could put a person in either camp, but one place to study the first group would be this site.
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October 31, 2009, 2:49 pmShelbyC says:
Oh, so they’re only limiting the pay of top earners, eh? :-)
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October 31, 2009, 8:30 pmfirst history says:
The seven companies knew their pay would be capped. I have very little sympathy for them, esp. since four of the companies are GM, Chrysler, and their financing arms.
If they didn’t want to suffer this indignity, they a) shouldn’t have accepted TARP funding in the first place, or b) should have paid it back like Goldman Sachs did. And the executives won’t be out at Halloween begging for dollars:
Of course the real pay czar should be company shareholders–but since most shares are controlled by other institutions (pension and mutual funds and insurance companies, for example) with their own highly paid executives, they see nothing wrong with such pay packages.
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October 31, 2009, 9:13 pmfirst history says:
Sorry about the double post.
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October 31, 2009, 9:21 pmmls says:
Perhaps you could give an example of the tradition you refer to. What McConnell is saying is that Feinberg is exercising “significant authority” within the meaning of Buckley v. Valeo and therefore must be appointed in accordance with the Appointments Clause. Since Congress has not “by law” authorized Feinberg to be appointed in any other manner, that Clause requires that he be appointed with advice and consent. As far as I can see, McConnell has to be right unless, for some reason, Feinberg is not actually an officer within the meaning of the Appointments Clause.
The possible grounds for arguing that Feinberg is not an officer would appear to be (1) that he is merely an advisor and is not actually exercising authority, just making recommendations or (2) that his functions are so temporary and/or intermittant as to exclude him from the definition of an officer. These don’t appear, at first blush, to be particularly strong arguments, but I cannot see any other way of escaping McConnell’s logic.
Other than putting your fingers in your ears and saying loudly “I can’t hear anything written in the WSJ,” of course. :)
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November 1, 2009, 11:15 amNathanael says:
“The possible grounds for arguing that Feinberg is not an officer would appear to be (1) that he is merely an advisor and is not actually exercising authority, just making recommendations”
Given that if there *is* any legal problem it is absolutely and utterly trivial to restructure the position to do exactly this, I think this is a nonissue. Yes, probably the Treasury Secretary should be signing the forms. What-ever.
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November 1, 2009, 2:20 pmProf. S. says:
Wait — so because it leans right, then the piece written in that page lacks credibility. But if it were written in another op/ed page... such as the L.A. or NY Times (which I think we can all agree leans left), it would be okay?
Or, if your argument is only that it is an op/ed page at all, then the fact that you mention the WSJ is supurfulous to your argument.
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November 2, 2009, 11:03 am