The Attack on the CFPB in Tomorrow's SCOTUS Case is an Ouroboros

The (pretty literally) eleventh-hour legislation to avert a government shutdown renders moot (for 45 days) the question of how a government shutdown would impact the federal courts. As explained in this Reuters story, it appears that the federal judiciary as a whole would be able to continue functioning more or less regularly for two weeks during a government shutdown and at least partially even after that, because the courts have funding sources--principally filing fees and the like--that are independent of annual federal appropriations measures.

Those funds would be prioritized to pay judicial salaries, lest the government breach the constitutional provision of Article III that forbids diminution of their compensation. Or at least that's the practice. Judges and Justices are paid during a government shutdown, so the issue of whether a delay in payment counts as a diminution of their compensation has not previously arisen and is unlikely to arise.

The fact that the federal courts are funded through fees that do not depend on annual budget laws--partly so in normal times and entirely so during a long government shutdown--should be more than a little bit embarrassing for the respondents in a case that will be argued tomorrow: Consumer Financial Protection Bureau v. Community Financial Services Ass'n of America (CFSAA). The CFPB receives its funding from the Federal Reserve, which in turn gets its funding from banks in the Federal Reserve system and open market transactions. The respondents represent payday lenders, who don't like a rule promulgated by the CFPB. They argue that CFPB's funding stream violates the provision of Article I, Section 9 that provides: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." And they say that therefore whatever the CFPB does with that money--including promulgation of the payday lending rule--is void.

Amazingly, the Fifth Circuit agreed with both the substantive and remedial claims. But wait. Since the very earliest days of the Republic, Congress has established agencies and entities (such as the Post Office) that are funded by external sources and that have always been accepted as satisfying the appropriations clause in light of the fact that the Act of Congress establishing such funding streams counts as the "Appropriation[] made by Law."

How, you ask, did the opinion of Judge Corey Wilson distinguish that statute and every other statute by which Congress has established funding mechanisms that do not rely on annual spending bills? He wrote that those are all different because . . . reasons. What reasons? I could go into the details, but I fear that, to paraphrase Nikki Haley's jab at Vivek Ramaswamy, reading them would make us all feel dumber. If you're interested in a devastating point-by-point explanation of why the Fifth Circuit's opinion is absurd, I commend the Solicitor General's brief.

Meanwhile, I'm glad we averted (for now) a government shutdown. The misery that would have been caused by even a brief stoppage of WIC payments is enough to make the stopgap funding measure a better outcome than a shutdown would have been. But I do confess that I have a tiny bit of regret that tomorrow's oral argument will not be taking place while much of the government is shut down but the Supreme Court itself is open because it's funded by the very kind of independent funding stream that the respondents say is unconstitutional and therefore voids any actions by an entity funded that way. If the respondents win, do they therefore lose, because the logic of their argument makes the funding of the Supreme Court itself--and thus everything it does--unconstitutional? Their argument swallows itself like a snake eating its own tail: an ouroboros

The respondents have some very smart lawyers who, I'm sure, would point to half a dozen distinctions between the Supreme Court and the CFPB, but in my view, none of those distinctions has anything to do with their incredibly sweeping and radical claim that "appropriations by law" means Congress must make the specific appropriation.

It will be interesting to see how many Justices are nonetheless attracted to the respondents' argument in CFSAA. In a rational world, the answer would be zero. In our actual world, I'm guessing that it could be as many as three. For now, though, happy First Monday.