The Minnesota Subprime Borrower Relief Act of 2008 passed the state House and Senate last week. According to Reps. Ellen Anderson and Jim Davnie, it could rescue 12,000 ‘foreclosure victims.’ They challenge Gov. Tim Pawlenty to sign the bill: ‘This is a time for courageous leadership.’

Fortunately, Pawlenty has leadership to look to:

 In Federalist 44, James Madison wrote, “Laws impairing the obligation of contracts are contrary … to every principle of sound legislation.”

One of the earliest chief justices, John Marshall, called “the power of changing the relative situation of debtor and creditor, of interfering with contracts” by state legislatures, a “mischief … so great, so alarming, as not only to impair commercial intercourse, and threaten the existence of credit, but to sap the morals of the people, and destroy the sanctity of private faith.”

Leadership is adhering to constitutional principle even during a “crisis.”

“The Constitution of the United States … covers with the shield of protection all classes of men, at all times, and under all circumstances,” wrote Justice David Davis in Ex Parte Milligan. “No doctrine, involving more pernicious consequences, was ever invented by the wit of man than that any of its provisions can be suspended during any of the great exigencies of government.”

Anderson and Davnie, however, march to a different drummer — New Deal-era Chief Justice Charles Evans Hughes: “We are under a Constitution, but the Constitution is what the judges say it is.”

Anderson and Davnie dismiss constitutional objections to their use of state police power to protect borrowers at the expense of their creditors. Regrettably, they have a point. In 1933 the Minnesota Legislature passed the Mortgage Moratorium Law to address Depression-era foreclosures. The law was challenged and reviewed by the U.S. Supreme Court in the 1934 case Home Building & Loan Association v. Blaisdell.

Blaisdell is one of the cases found in “The Dirty Dozen: How 12 Supreme Court Cases Radically Expanded Government and Eroded Freedom.” Authored by William Mellor, president and general counsel at the Institute for Justice, and Robert Levy, senior fellow in constitutional studies at the Cato Institute, “The Dirty Dozen” describes 12 Supreme Court cases since the New Deal that pulled America away from constitutional government toward a government of unrestrained power. Blaisdell is worthy of its infamous distinction.

In a 5-4 opinion authored by Chief Justice Hughes, the court essentially eviscerated the constitutional provision in Article 1, Section 10, which declares “No State shall … pass any … Law impairing the Obligations of Contracts.” Since the Blaisdell decision, the Supreme Court has denied virtually every contracts clause claim presented to it.

During debate on the foreclosure bill in the Minnesota House of Representatives, supporters cited parallels between the proposed 2008 legislation and the 1933 legislation that led to a government-friendly decision in Blaisdell. More damning parallels that strike at the heart of constitutional protections were ignored.

Anderson and Davnie opine that their legislation is “meant to help owner-occupiers — people who live in the home they borrow money for.” It is “narrowly targeted at loans made by finance companies and unscrupulous brokers” and “does not help anyone who tried to make a quick buck.” Writing in Blaisdell, Chief Justice Hughes reasoned that lenders “are predominately corporations” who “are not seeking homes or the opportunity to engage in farming. Their chief concern is the reasonable protection of their investment security” (emphasis added).

“There you have it,” Mellor and Levy say, “a new hierarchy of rights based on class and found nowhere in the Constitution.”

Blaisdell (and the Anderson-Davnie legislation) condones state action that arbitrarily segments a group of creditors and sacrifices their rights to an equally arbitrary class of debtors, the contracts clause be damned.

If borrowers are victims of fraudulent actions, appropriate civil and criminal remedies are available. But if borrowers simply made bad deals, why should creditors, whatever their reason for investing, sacrifice the constitutional guarantee of “reasonable protection of their investment security”?

Whether it’s Blaisdell or Helvering v. Davis, which established the beachhead for the “Entitlement Society,” Korematsu v. United States, which held that persons could be detained indefinitely during wartime without evidence of wrongdoing, or Kelo v. City of New London, which redefined the concept of “public purpose” to justify taking private property from one individual and transferring it to another, or any of the “Dirty Dozen,” Supreme Court decisions can have, as Mellor has said, “a systemic, negative impact on our governing institutions and our rights.”

Pawlenty may soon be a candidate just a heartbeat away from the oath to “preserve, protect and defend the Constitution of the United States.” In the spirit of the Constitution, he could do no better than to veto the Anderson-Davnie legislation.

Craig Westover is a contributing columnist to the Pioneer Press Opinion page and a senior policy fellow at the Minnesota Free Market Institute (www.mnfmi.org). His e-mail address is westover4@yahoo.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

This commentary originally appeared in the St. Paul Pioneer Press, Tuesday, May 27, 2008.

That both political parties can spin the 2008 legislative session to their advantage tells you all you need to know about politics in Minnesota: It is all about outcomes and has little to do with principle. A telling vote at the end of the session, the 127-7 House vote to pass a health care reform bill, provides both a microcosm of politics as usual and a hint of things to come.

The bipartisan S.F. 3780 is essentially the same health care bill that Gov. Tim Pawlenty had vetoed last week (H.F. 3391). The legislation is a slightly watered-down version of the Governor’s Health Care Transformation Task Force report, which advocates a public-private partnership approach to reducing health care costs in which the two are virtually indistinguishable. It is not, however a single-payer system, which would eliminate private health insurance and put the health care system under government control.

There’s enough free-market language and hat-tipping to free-market ideas in S.F. 3780 that conservatives can make their “it’s not as bad as it could have been” victory speech sound credible. The bill makes more people eligible for state-sponsored medical care and establishes a well-fortified beachhead for further government expansion into health care, and liberals can boast the legislation was clearly their initiative. Politics as usual.

The 127 House members voting for S.F. 3780 included Democrats, Republicans, liberals and conservatives. The group picture is in the dictionary next to the entry “bipartisan consensus.” However, the seven dissenters are far more interesting, for there is not even a hint of consensus among the “no” votes.”

Among those voting against the compromise health care reform one finds Reps. Mark Buesgens and Tom Emmer, who consistently and on principle put individual rights ahead of collective solutions. One also finds Reps. Shelly Madore and David Bly, supporters of a single-payer government-run health care system. They, too, on principle, cast votes against a compromise health care reform.

S.F. 3780 is legislation that a free-market advocate instantly recognizes is fundamentally flawed. It eschews economic principle in favor of “culprit economics,” blaming the high cost of health care on doctors providing medical treatment rather than promoting wellness and individuals living unhealthy lifestyles. Instead of putting health care dollars and decision-making in the hands of patients, the legislation regulates doctor and patient behavior.

The single-payer advocate also spots a fundamental flaw in S.F. 3780: Emphasizing wellness makes people healthier, but it doesn’t save costs. It requires “wasting” a vast amount of resources on people who would remain healthy without special preventive care and people who will develop acute and chronic diseases despite preventive medicine. The better way to reduce health care cost is eliminating administrative costs by eliminating private insurance altogether. Think Medicare for all.

It is among the seven, not the 127, where future political lines will be drawn.

The fundamental political difference is between those who believe that government is instituted among people to protect the unalienable individual rights of life, liberty and property, and those who believe that government is an instrument for creating a better world including a right to adequate medical care and the opportunity to enjoy good health; the right to adequate protection from the economic fears of old age, sickness, accident and unemployment.

Individual freedom and planned equality are irreconcilable positions. A better world cannot tolerate the less-than-perfect choices free individuals make. Freedom will inevitably create inequality and thus, freedom is incompatible with a planned vision for a “better world.”

That conflict cannot be compromised out of existence. It cannot be dismissed with the cliche “the truth lies somewhere in the middle.” It does not disappear under the pressure to “get something done” before midnight on the third Sunday in May. The conflict cannot be camouflaged by complex, incomprehensible legislation. It cannot be drowned out in a chorus of “Kumbaya.”

Ultimately there comes a time for every individual to choose between principle and pragmatism, between the uncertainty of freedom and the security of control, between striving for equality and striving for excellence, between just doing something and doing what is right. Whatever the memorable moments of the 2008 legislative session, it failed miserably to do the right things.

Craig Westoveris a contributing columnist to the Pioneer Press Opinion page and a senior policy fellow at the Minnesota Free Market Institute, www.mnfmi.org. His e-mail address is westover4@yahoo.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

This commentary originally appeared in the St. Paul Pioneer Press, Thursday, May 22, 2008.