Eric Rasmusen's Thoughts on Stern v. Marshall

Eric Rasmusen of Indiana University and I were having a back channel communication on the U.S. Supreme Court's holding Stern v. Marshall (see here for a summary). Eric made a very interesting observation about the intellectual move the Supreme Court made and how it relates to ideas of judicial deference to agency expertise. Eric was kind enough to give me permission to share his thoughts with the Credit Slips audience.

by Eric Rasmusen

I’m currently writing on the Intermountain tax case, where the issue is whether after the IRS loses  in  a unanimous en banc Tax Court decision about statutory interpretation, the IRS can then write a regulation asserting its favored interpretation and use that regulation plus Chevron deference to win on appeal to a District Court. The DC Circuit said the IRS can; other circuits vary in their decisions. Brand-X also is an opinion with a similarly expansive view of ; there, the Supreme Court implies that its own precedents can be overruled by executive interpretations that are not arbitrary and capricious.

Stern v. Marshall makes for an interesting comparison. There, the Supreme Court ruled that a Bankruptcy Court’s findings on points of state law, at least (it was a narrow holding) cannot be final judgments. In addition, it is well-established that Bankruptcy Courts’ (and District Courts’ and Circuit Courts’ too, right?) findings on questions of law are reviewed de novo.

In other words: we can trust those guys in ATF and the FBI to be restrained and intelligent, and we can trust the guys in the IRS to be restrained in their claims for executive authority, but when it comes to the appellate-appointed bankruptcy judges--- reckless, emotionally involved,  power-mad, and pea-brained--- watch out!

All this is weird. An economist like me can’t understand why it is that courts feel they can decide policy issues such as whether homosexuality and abortion should be legal, and operational issues such as the fine details of police search procedure, when the judges say that are neither qualified nor empowered to interpret the words of statutes. If the court is objective  and wise enough to be able to decide when human life begins, surely it can figure out what “omits from gross income” means. What else are appellate judges good at, if not figuring out the meaning of words?

As I replied to Eric, a bankruptcy judge might complain Stern v. Marshall makes them no better than an administrative functionary, but that would be wrong. An administrative functionary has more power. There are many things that Stern v. Marshall implies that an administartive functionary can do--think "public rights"--that a bankruptcy judge cannot. Thank you, Eric, for letting me share your thoughts.