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PERSPECTIVES
HAROLD HONGJU KOH* JOHN (^) CHOON YOO**
Dollar Diplomacy/Dollar Defense:
The Fabric of Economics and
National Security Law
In his (^) first term President George Bush's most enduring achievements (^) have relied upon the flexing of U.S. economic and national security (^) power. The lightning-quick (^) Persian Gulf War witnessed not only the use of (^) American and allied military force, but also the sustained (^) application of comprehensive, uni- lateral and multilateral economic sanctions. On a front closer (^) to home, the Bush administration (^) commenced negotiations that drew the nation (^) closer to a hemisphere-wide free trade area that would include both Canada and Mexico. Both efforts required (^) the United States to marshal dramatically its economic and national security powers, (^) raising significant questions about the proper role of the three governmental branches (^) in the legal regimes governing those powers. This article examines the major areas in which the three branches (^) have de- veloped economics and national security law during the history of our republic. Such legal regimes generally fall into two broad categories: first, those laws that manipulate fiscal, monetary, and domestic economic policies to achieve national security goals; and second, those laws that control or respond (^) to external rela-
*Professor of Law, Yale University. B.A., 1975, Harvard (^) University; Honours B.A., 1977, Ox- ford University; J.D., 1980 Harvard University. This article was originally prepared for the Eco- nomics and National Security Project of the Committee on National Security and International Law of the ABA Section of International Law and Practice. The authors (^) thank Eli Whitney Debevoise II and Alan Charles Raul for their invaluable (^) assistance. **B.A., 1989, Harvard University; (^) J.D., 1992, Yale University.
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tions through economic measures. The legal regimes governing each category show how the complex interaction among all three branches influences U.S. economics and national security policy. As important, they demonstrate how our constitutional system of government creates the legal means^ that both authorize and limit our political system's attempts to achieve its economics and national security goals. Upon reflection, U.S. national security policy incorporates at least five iden- tifiable economic elements. First, U.S. national security depends heavily upon a healthy domestic economy that is fully capable of supporting U.S. military and political goals. Second, national security policy regularly requires the use of economic power as a tool, either as a stick to sanction hostile nations or as a carrot to encourage the economic growth and development of friendly ones. Third, U.S. national security militates in favor of preventing hostile nations from obtaining crucial military technologies and materials. Fourth, the domestic economy's abil- ity to satisfy defense^ needs^ hinges upon^ maintaining^ ample^ domestic stocks^ of critical materials. Fifth, national security may require that U.S. economic controls apply with sufficient force not just to adversaries, but also to^ allies,^ so as^ to^ ensure implementation of a unified and coordinated national policy. Over the decades Congress, the President, and the courts have developed and elaborated five major statutory schemes^ to^ regulate^ economic^ and^ national^ se- curity power. These schemes, which address a spectrum of^ problems ranging from domestic economic regulation, to emergency powers, to export controls, to trade and import controls, to extraterritorial application of U.S. law, have^ given the federal government broad powers to manage economic and national security affairs. Although the Constitution assigns Congress the task of regulating foreign and domestic commerce, more often than^ not^ the^ executive^ branch^ has^ won^ the dominant hand in setting policy in these areas. Hence, this article examines the parallel growth of governmental economic and national security power and of presidential power within the constitutional system. Part I traces the historical development of American economics and national security decision making to show how our governmental institutions^ have^ dis- tributed constitutional powers among themselves. Part II scrutinizes in closer detail the post-World War^ II^ relationship^ between^ economics^ and^ U.S.^ national security, and examines how the constitutional system has developed the decision- making mechanisms that have set the modern foundations of policy in those areas. Part III discusses how^ two^ parallel^ trends,^ the^ rising^ importance^ of^ eco- nomic factors for U.S. national security and the growing presidential power over both, have affected the five major categories of economics and national security laws outlined above. In reviewing this terrain, our goal is not to be exhaustive. Instead, the article has a^ thematic^ purpose: to^ demonstrate^ the^ close^ linkage^ between^ the^ central- ization of economics and national security power and the growth in presidential power. The Cold War threat pushed power into the hands of the executive,
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dency. Moreover, these historical examples also show the precursors to the modem system of export, emergency, and domestic economic powers that form the core of today's economic and national security policies, described further (^) in Part III.
A. ECONOMICS (^) AND NATIONAL SECURITY IN THE FOUNDERS' CONSTITUION When the delegates to the Constitutional Convention met during (^) the summer of 1787, concerns about national security and the economy were forefront in their minds. Opening the "main business" of the Convention on May 29, the first speaker, Edmund Randolph, rose to cite the defects of the Articles (^) of Confederation. (^) "The confederation produced no security against foreign inva- sion," Randolph argued, nor could Congress "prevent a war nor support it by their own^ authority."^
2 Randolph (^) noted that a stronger central government would permit the central government both to wage economic warfare, the "counteraction of the commer- cial regulations of other countries," and to push its own exports overseas. 3 Other delegates agreed. (^) According to Roger Sherman of Connecticut, any national government must have the authority to pursue four primary goals, three of which involved (^) national security and the economy: "defense against foreign danger"; defense "against internal disputes and a resort to force"; "treaties with foreign nations"; and "regulating foreign commerce^ and^ drawing revenue^ from^ it."^
4
To achieve these goals, (^) the Framers expressly afforded the national govern- ment more power at the expense of the states. (^) At the federal level they created an executive branch (^) designed to act swiftly to guard the nation's safety, and to operate consistently with the core principle of separation of powers. Thus, while expanding the foreign affairs power of the federal government, the new Consti- tution subjected that power to the institutional checks and balances that also governed domestic affairs. Moreover, this design initially placed Congress in the leading role in foreign affairs, but also left room for the executive to take the initiative. Accordingly, the Constitution gave Congress many, if not most, of the enu- merated powers over national security and the economy. Article I, section 8 placed with Congress important national security powers to "declare War, grant Letters (^) of Marque and Reprisal, and make Rules concerning Captures on Land and Water"; to "provide for the common Defense"; to "regulate Commerce with foreign nations"; to "define and punish Piracies and Felonies committed on the high seas" and offenses against the "Law of Nations"; to "raise and support
- NOTES OF DEBATES IN THE FEDERAL CONVENTION OF 1787 REPORTED BY JAMES MADISON 29 (Adrienne Koch ed., 1966). 3. Id. at 29. 4. Id. at 74.
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Armies," to "provide and maintain a Navy," and to set rules regulating them plus the^ power^ to^ "establish^ a^ uniform^ Rule^ of^ Naturalization."^
5
Article I also made Congress paramount in economic affairs. Congress re- ceived the power to regulate both interstate and foreign commerce; to "lay and collect Taxes, Duties, Imposts and Excises"; to "borrow Money on the credit of the United States"; as well as the power to "coin Money, regulate the Value thereof, and of foreign Coin." Article I further authorized Congress to grant patents and copyrights; to set uniform bankruptcy laws, and to "pay the Debts and provide for the .... general Welfare of the United States." 6 Beyond these specific grants, the Framers also granted Congress the broad, undefined power "to make all Laws which shall be necessary and proper for carrying into Exe- cution the foregoing Powers, and all other powers vested by this Constitution in the Government of the United^ States,^ or^ in^ any^ Department^ or^ Officer^ thereof."^
7
Article II, by contrast, granted the executive branch only a few specified, but potentially expansive, powers. Article II named the President "Commander in Chief" of the military, recognizing his authority to wage war once Congress had declared it. 8 Article H further empowered the President to "make Treaties" with the advice and consent of the Senate, and to appoint and receive ambassadors. 9 Moreover, Article II vested all "executive power" in the President, coupled with an obligation that he take care that the laws be "faithfully execute[d]. '^1 ° As a counterweight to the political branches, Article III established one Su- preme Court and envisioned a system of inferior federal courts exercising juris- diction over all cases arising under "this Constitution, the Laws of the United States, and Treaties."'" Article III expressly extended federal jurisdiction to "cases" (^) affecting ambassadors (^) and involving (^) the admiralty and (^) maritime laws,
and to "controversies" with foreign states, citizens and subjects.1 2 As imple- mented by the Judiciary Act of 1789, these powers placed the judicial depart- ment in a vital^ checking^ role^ over^ foreign^ affairs.'^
3
Thus, the Constitution specified that powers relating to national security and the economy were to remain shared powers. Congress would legislate, the Pres- ident would execute, and the judiciary would interpret the laws, whether they
5. U.S. CONST. art. I, § 8. 6. Id.
- Id. cl. 8.
- Id. art. 11, § 2. 9. Id.
- Id. art. 11, § I.
- Id. art. Ill, § 2.
- Id.
- 1 Stat. 73 (1789). The first Judiciary Act included, for example, the Alien Tort Statute, 28 U.S.C. § 1350, 1 Stat. 77 (1789), which gave federal district courts "original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations." See generally Harold Hongju Koh, Civil Remedies for Uncivil Wrongs: Combatting Terrorism through Transnational Public Law Litigation, 22 Ttx. INT'L L.J. 169 (1987); Harold Hongju Koh, TransnationalPublic Law Litigation, 100 YALE L.J. 2347, 2353 (1991).
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Adams set the stage for Jefferson, under whose presidency the executive's power to regulate the economy for national security purposes blossomed. How- ever, Congress expressly authorized this expansion by steadily wider delegations of authority, thus preserving the Constitution's vision of power-sharing. The 1803 war engulfing Europe transformed the United States into the world's largest neutral carrier, leading to harassment of U.S. shipping by both the British and French. British warships impressed U.S. sailors 19 and blockaded all ships bound for the continent. Napoleon responded by seizing U.S. ships that had docked in Britain. In response, Jefferson requested and received from Congress the Embargo Act, which prohibited all exports from the United States, and the Nonimporta- tion Act, which forbade imports from Britain. Congress ceded Jefferson wide discretion to wage economic war. Congress (^) gave the President power to suspend the embargo upon, in his judgment, "such changes in [Britain's and France's] measures affecting neutral commerce, as may render that of the United States sufficiently safe." 20 Congress also authorized Jefferson to apply or suspend the nonimportation laws at his discretion, to employ the army and navy to enforce the embargo laws, and to close U.S. harbors to foreign ships as he chose.2 1 Thus, the early Republic's leaders sought to guard U.S. security by delegating to the executive the power to decide when and how to wage economic warfare. One Federalist senator complained that (^) President Jefferson had acquired "the power, not of declaring war in form, but of adopting a course of measures which will necessarily and inevitably lead to war. '^22 But Jefferson had not acted uni- laterally; rather, Congress had overwhelmingly supported his policies and chose to let him lead. This structure of presidential leadership and explicit congres- sional approval characterized Jefferson's other foreign policy achievements, in- cluding the Louisiana Purchase and pacifying the Barbary Pirates. 23 This pattern similarly characterized events leading up to the War of 1812, the logical culmination of Jefferson's policies. In the trade statutes leading up to the war, the Non-intercourse Act and then Macon's Bill No. 2, Congress allowed President Madison wide discretion to clamp down or lift the embargo against Britain and France. Madison eventually used this delegated power to lift the embargo against France and to continue it against Britain. Indeed, President Madison and Congress decided to wage war against Britain precisely because of the tight link between economic and national security is- sues. In his June 1, 1812, war message to Congress, Madison said: "Our com- merce had been plundered in every sea, the great staples of our country have been
19. For an historical account of one famous impressment case, see Ruth Wedgwood, The Rev- olutionaryMartyrdom of JonathanRobbins, 100 YALE L.J. 229 (1990).
- 18 ANNALS OF CONG. 2065 (1808).
- SoFAER, supra note 18, at 175-76; Act of Mar. 3, 1805, 2 Stat. 339, 341-42.
- 17 ANNALS OF CONG. 332, 335 (1808) (remarks of Sen. Hillhouse).
- SOFAER, supra note 18, at 225-26.
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cut off from their legitimate markets, and a destructive blow aimed at our agricul- tural and maritime interests" by Britain. 24 Privately, Madison noted that the United States had gone to war to protect its sovereignty "on which all nations whose agriculture and commerce^ are^ so^ closely^ allied,^ have^ an essential^ interest."^
25
Throughout the embargo policies of Adams, Jefferson, and Madison, the third branch, the judiciary, maintained its balancing role in national security affairs. In a series of cases the Supreme Court upheld congressional power to wage eco- nomic warfare, but checked executive power to extend the (^) scope of such wars. In Bas v. Tingy the Supreme Court held that the United States could wage an undeclared, "imperfect war" without a formal declaration because of explicit congressional authorization. 26 Similarly, in The Cargo of the Brig Aurora v. United States the Supreme Court upheld the congressional delegation of author- ity to President Madison (^) to suspend commerce with Britain while continuing it with France. This act eventually forced war with Britain. 27 However, the Court invalidated actions authorized by executive instruction, but outside the powers delegated by Congress. In Little v. Barreme, the Court held liable a U.S. com- mander who had seized a neutral ship in violation of a congressional statute, even though he had acted pursuant to a presidential order.^28 Again, in the 1814 case Brown v. United States, Chief Justice Marshall held that the attorney general could not seize British-owned timber once war had begun if Congress had passed no law allowing such^ a^ measure.^
29
Thus, early U.S. policy regarding economics and national security rested upon a foundation of balanced institutional participation. Under President Jefferson and his successors Congress gave the executive broad powers with which to wage economic warfare. The courts acted as an umpire (^) in upholding delegated power, but also in preventing the executive from exceeding its statutory mandates. Throughout, (^) the presidency grew in power as it became the primary decision maker in setting national security policy and waging economic warfare. The Jef- fersonian period also demonstrates how export measures first assumed an im- portant (^) role in national security policy. Significantly, the precedent of broad con- gressional delegations of authority to the executive would hold true over time and would become the defining characteristic of our modem export control system.
C. LINCOLN AND THE RISE OF EMERGENCY PRESIDENTIAL POWERS National rebellion forced President Lincoln to adopt dramatic and unprece- dented emergency measures to preserve the Union. Events had moved swiftly
- LOYD C. GARDNER ET AL., CREATION OF THE AMERICAN EMPIRE 92 (1976). 25. THOMAS G. PATERSON, AMERICAN FOREIGN PoLIcY: A HISToRY 70 (1988).
- Bas v. Tingy, 4 U.S. (4 Dall.) 37, 40-41 (^) (1800).
- The Cargo of the Brig Aurora, Burnside v. United States, 11 U.S. (7 Cranch) 382 (1813).
- Little v. Barreme, 6 U.S. (2 Cranch) 170 (1804). 29. Brown v. United States, 12 U.S. (8 Cranch) 110 (1814).
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Article I's interstate and foreign commerce clauses. Throughout the war Lincoln ordered the seizure of property, the suppression of newspapers, the emancipation of the slaves (which in addition to its human and political consequences, had far-ranging economic impact), and planned reconstruction. Lincoln conceded that he had acted outside his constitutional powers, but defended himself by saying that the Constitution would mean little without the nation: "I felt that measures, otherwise unconstitutional, might become lawful, by becoming indispensable to the preservation of the Constitution through the preservation of the nation," Lincoln later said. 36 Although acting unilaterally, Lincoln went to Congress and the courts for sup- port after the fact. In his July 4, 1861, message to Congress Lincoln defended his emergency actions: "These measures, whether (^) strictly legal or not, were ventured upon, under what appeared to be popular demands and a public necessity; trusting, then, as now, that Congress would readily ratify them. '^37 Faced with this fait accompli, Congress enacted the President's measures into law. The judiciary followed Congress in deferring to the President. In the Prize Cases, the Supreme Court upheld Lincoln's order imposing a blockade on the South, even though Congress had never issued the declaration of war necessary for a blockade. 38 The blockade constituted an indispensable economic weapon against the South, which relied on Europe as a market for its raw cotton and as a source of manufactured goods. Moreover, the South hoped these economic ties would bring England into the war on its side. 3 9^ As in the early Republic, U.S. national security depended on international commerce, but this time the execu- tive wanted to strangle trade, not promote it. In supporting the President's authority to suppress rebellion, the Court de- ferred to the use of such expansive executive power. The Court found that the President had an inherent, unenumerated power to quell rebellions, and that Congress had ratified his decisions. Moreover, the Justices suggested that the judiciary ought not review this exercise of national security and economic power, even in an area textually granted to Congress. The Court then linked, for the first time, the political question doctrine to economic and national security decisions by the President. The President's means to subdue the insurrection, they said, were "question[s] to be decided by him, and this Court must be governed by the decisions and acts of the political department of the Government to which this power was entrusted."4° The Civil War gave rise to an enormous enlargement of the executive's power to guide unilaterally economic and national security affairs. However, the Fram-
36. ABRAHAM LINCOLN: SPEECHES AND WRINGs, supra note 30, at 283 (letter from Abraham Lincoln to Albert G. Hodges (April 4, 1864)). 37. Id. at 252. 38. Prize Cases, 67 U.S. (2 Black) 635 (1862).
- PATERSON, supra note 25, at 139-40.
- Id. at 670 (emphasis added).
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ers' basic^ design^ of^ balanced institutional^ participation^ remained intact. Lincoln did not claim unchecked executive power, but turned^ to^ Congress for^ approval^ of his emergency actions. Although^ initially deferential,^ by^1866 the^ courts^ began rejecting Lincoln's theory of emergency power. In Ex parte Milligan,^ a^ habeas corpus case, the Court declared that the^ Constitution^ functioned^ "equally^ in^ war and in peace. ' 4 1^ The Court said: "No doctrine involving more pernicious consequences was ever invented by the wit of man than that any of [the Con- stitution's] provisions can be suspended during^ any^ of^ the^ great exigencies^ of government.'
4 2
The Lincoln administration's^ use^ of^ emergency powers^ set^ an^ example^ for later Presidents to follow. Put simply, external events^ forced^ political^ power^ to flow to the branch best suited structurally for its exercise. Beset by the dire events of the Civil War, Lincoln responded with a series of domestic emergency economic measures. Although consulted afterwards,^ neither^ Congress^ nor^ the courts challenged the President's^ action. While later^ Congresses^ would attempt to regulate emergency powers, Presidents usually would find themselves unop- posed even if they exceeded their statutory mandates. But this exercise of emer- gency power, still formally domestic, had not yet^ been^ directed outward^ toward foreign governments or entities.
D. FDR, ECONOMIC REGULATION, AND NATIONAL SECURITY
If the Civil War years fueled a transient surge of presidential emergency authority, the New Deal years marked a^ more^ fundamental^ revolution^ in^ presi- dential power both at home and abroad. The Depression and World War II combined to make FDR not just the United States' leader, but the world's. In the realm of constitutional law, the executive branch claimed and received^ increas- ingly broad authority to decide economic and national security issues.^ Often, Congress and the Supreme Court helped give the President wide authority. How- ever, FDR did not hesitate to act unilaterally when he believed that national security was at stake. His actions triggered sweeping new federal regulation of the domestic economy for national security ends. FDR considered the Great Depression a powerful threat to the nation's secu- rity. In his inaugural address, the new President compared the Depression to a war against the United States that warranted extraordinary countermeasures: It is hoped that the normal balance of Executive and legislative authority may be wholly adequate to meet the unprecedented task before us. But it may be that an unprecedented demand and need for undelayed action may call for temporary departure from that normal balance of public procedure. I am prepared under my constitutional duty to recommend the measures that^ a stricken Nation in the midst of a stricken world may require.^ ...
- Ex Parte Milligan, 71 U.S. (4 Wall) 2 (1866).
- Id. at 120-21, 126.
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While the Court resisted delegation of purely domestic economic power, it proved more forgiving when the delegation also involved foreign affairs. The intersection between economic and national security power lay at the heart of United States (^) v. Curtiss-WrightExport Corp., a 1936 decision, which, as much as any other, symbolizes a constitutional (^) vision founded on broad inherent presi- dential authority. 51 Curtiss-Wright attacked a joint resolution (^) of Congress au- thorizing the President to stop arms sales to Bolivia and Paraguay as an invalid delegation of congressional power. Justice Sutherland, writing for the Court, upheld the President's action against the nondelegation attack: "[I]f, in the maintenance of our international relations, embarrassment... is to be avoided," he wrote, "congressional legislation which is to be made effective through negotiation (^) and inquiry within the international field must often accord to the President a degree of discretion and freedom from statutory restriction which would not be admissible were domestic affairs alone involved." 52 This language, which can be called the "Curtiss-Wright theory of statutory construction," has subsequently fostered unusual judicial deference when courts construe statutes that delegate powers to the President in foreign affairs. The broader intellectual legacy of Curtiss-Wright, however, has been its ex- pansive constitutional theory of inherent presidential powers over foreign affairs. Examining the history of U.S. foreign relations, Justice Sutherland postulated an extra-constitutional theory of sovereignty: "Investment of the federal govern- ment with the powers (^) of external sovereignty did not depend upon the affirmative grants of the Constitution." 53 Such powers, he said, "if they had never been mentioned (^) in the Constitution, would have been vested in the federal government as necessary concomitants of nationality." (^54) Because of the complexity of the external world, Sutherland suggested that the executive branch had the unenu- merated inherent power, even without congressional authorization, to order U.S. foreign affairs: In this vast external realm with (^) its important, complicated, delicate and manifold problems, the President alone has the power to speak or listen (^) as a representative of the nation.
... [W]e are here dealing not alone with an authority vested in the President by an exertion of legislative power, but with such an authority plus the very delicate, plenary and exclusive power of the President as the sole organ of the federal government in the field (^) of international relations-apower which does not require as a basis for its exercise an act (^) of Congress .... With these words, Justice Sutherland articulated a constitutional rationale for the unchecked executive power FDR sought, but rested it upon shaky legal and
- United States v. Curtiss-Wright Corp., 299 U.S. 304 (1936).
- Id. at 320.
- id. at 318.
- Id.
- Id. at (^) 319-20 (citation omitted). FALL 1992
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historical grounds. As historians have noted, Sutherland's historical analysis was deeply flawed. Meanwhile, legal scholars have emphasized that his^ constitutional reasoning constituted unnecessary dicta and without explanation^ awarded^ federal foreign affairs powers solely to the President, while repudiating the^ core^ con- stitutional notion that presidential powers are not inherent, but derive solely from the consent of^ the^ governed.5 6^ However,^ by^ its^ own terms,^ Justice^ Sutherland's opinion contained important, but often^ overlooked,^ words^ of^ limitation.^ By emphasizing the President's power "to speak and listen," Sutherland arguably defended only the long-recognized executive control over diplomatic communi- cations, not a broader power^ to^ conclude international agreements^ or^ commit troops. Furthermore, Curtiss-Wright^ expressly^ acknowledged^ that^ the^ Presi- dent's power "must be exercised in subordination to the applicable provisions^ of the Constitution," including both substantive and procedural limitations^ set^ by the Constitution, as well as the Bill of Rights. 5 7^ Nonetheless, Curtiss-Wright has become the rhetorical touchstone for subsequent presidential claims of a plenary, exclusive, foreign affairs power that exists independent of the Constitution and of statutory authorization.5 s A year later Justice Sutherland extended this inherent presidential power to include certain international agreements, giving the executive a boost in ordering the domestic economy for national security purposes. In United States v. Bel- mont, 59 the^ Court^ sanctioned^ the^ constitutionality^ of^ executive^ agreements, which did not require approval of two-thirds of^ the^ Senate, when^ implemented pursuant to recognition of a foreign government. Reacting to an executive agree- ment known as the "Litvinov Assignment," FDR had extended diplomatic re- lations to the Soviet Union in exchange for certain Soviet assets in the United States. 60 Again writing for the Court, Justice Sutherland upheld the executive agreement and the executive branch's seizure of the assets against a federalism challenge. Five years later the Court reaffirmed its finding in United States v. Pink, holding that the power to make such international agreements^ incident^ to
- See generally David M. Levitan, The ForeignRelations Power: An Analysis of Mr. Justice Sutherland's Theory, 55 YALE L.J. 467, 472-78 (1946); Charles A. Lofgren, United States v. Curtiss-Wright Corporation: An HistoricalReassessment, 83 YALE L.J. 1 (1973);^ KOH,^ supra^ note^ 1, at 93-95. 57. Curtiss-Wright, 299 U.S. at 320. By substantive constitutional limits, we mean that^ Curtiss- Wright did not give the President, as "sole organ," the^ power^ to^ declare^ war or^ regulate foreign commerce, substantive powers^ that^ the^ Constitution^ expressly granted^ to^ Congress.^ By^ procedural constitutional limits, we mean that Curtiss-Wright similarly did not authorize the^ President^ to^ make treaties or^ appoint ambassadors without the^ constitutionally requisite^ senatorial^ consent.^ Nor^ did^ that case authorize him, in^ the^ exercise^ of^ his^ foreign affairs^ authority,^ to^ override^ First^ Amendment^ or Due Process rights. 58. See KOH, supra note 1, at 94 (among government^ attorneys,^ Justice^ Sutherland's^ lavish description of the President's powers is so often quoted that it has come to be known as the "Curtiss-Wright, so I'm right" cite-a statement of deference to^ the^ President^ so^ sweeping^ as^ to^ be worthy of^ frequent citation^ in^ any^ government^ foreign-affairs^ brief).
- United^ States^ v.^ Belmont,^^301 U.S.^324 (1937).
- Id.^ at^ 326-27.
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rescue the economy, but also to pursue a range of national security goals. Hence, the New Deal years simultaneously (^) centralized executive power over both eco- nomic and national security affairs, offering the President (^) the option of employ- ing those powers as interchangeable or complementary policy instruments. In sum, the administrations of Jefferson, Lincoln, and FDR forged and pro- gressively strengthened the link between economics and national security. The three Presidents increasingly relied upon economic measures, in lieu of and supplemental to diplomatic and military measures, to safeguard the nation's security. Jefferson employed trade embargoes (^) to maintain U.S. independence from the European great powers. Lincoln invoked emergency (^) presidential pow- ers to preserve the Union from the threat of rebellion. FDR implemented do- mestic regulation, both to restore the health of the economy, and to pursue U.S. national security policies. These administrations laid three important foundations for current economic- national security statutory regimes. First, modem Presidents now count trade controls and embargoes, emergency economic powers, and domestic regulation as their most effective economic weapons in implementing national security policies. These three charismatic Presidents established patterns of presidential initiative in national security policy, and through broad congressional delegations of authority, implemented that policy through differing economic tools. Second, acquiescing to presidential leadership, Congress wrote laws that imposed rela- tively few conditions upon executive exercise of statutory powers. Third, (^) the courts regularly tolerated expansive congressional delegations and presidential initiative, although they did not shy away from deciding such cases on the merits. This emerging systemic pattern of executive initiative, congressional acquies- cence, and judicial tolerance increasingly characterized all phases of our national security policy. 67 This trend would crystallize during the postwar period into a growing tug-of-war between the constitutional vision of balanced institutional participation and the perceived need for unrestrained executive power.
II. The Cold War and the National Security State The Cold War dramatically heightened U.S. concern for national security. Threats of Communist aggression and international instability spurred demand for centralized economic and national security controls. Policymakers sought to implement economic measures they could bring to bear in a coordinated and swift fashion upon national security crises. While the New Deal experience led to a rapid consolidation of power in the executive branch, (^) the Cold War provided an ongoing external threat that accelerated the trend. Meanwhile, this ever- present threat forced policymakers (^) to develop, for the first time, comprehensive statutory schemes for implementing economic and national security policy.
- See generally KOH, supra note 1, at 5, 117-49.
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This part of the article examines the evolution of the current structure of economics and national security policymaking, (^) starting with the early Cold War years, (^) which saw the reaffirmation of balanced institutional participation as the constitutional model for promulgating economic policy. Just as the early Cold War laid the foundations for the national security state, so too it established the modem relationship between economics and national security. The following discussion traces how all three branches, spurred by the Cold War, structured a system of presidential leadership in economic and national security decision making that elevated economic goals into an integral component of national security policy. At the same time, the Cold War (^) fostered a rapid expansion in presidential power, forcing the Supreme Court to intervene and reinforce the constitutional vision of shared powers.
A. EcoNoMics, NATIONAL SECURITY, AND YOUNGSTOWN
World War II left U.S. leaders convinced of the interdependence between economics and national (^) security matters. Just as Munich had taught the value of abandoning appeasement, so too the onset of war emphasized how economic stability, (^) brought about through national economic controls, could have main- tained peace. First and foremost, U.S. leaders linked the worldwide depression and ensuing economic instability of the 1930s (^) to the rise of fascism. Thus, shoring up the economies of Western Europe and Japan and establishing (^) a stable international economic system assumed top priority for the Truman adminis- tration. President Truman realized that alliance politics rendered U.S. national secu- rity dependent upon the economic health of its allies. "Which is better for the country," Truman asked during consideration of the Marshall (^) Plan, "to spend twenty or thirty billion dollars (^) to keep the peace or to do as we did in 1920 and then have to spend 100 billion dollars for four years to fight a war?" 6 8^ Accord- ingly, FDR and Truman committed themselves to jumpstarting Allied economies with the Marshall Plan and (^) laid the multilateral foundations of the postwar economic order through the Bretton Woods Accords. World War II also left policymakers convinced that national security required close control over the domestic economy and its links to the international eco- nomic system. Wartime mobilization had shown how management of the econ- omy could sustain the military establishment necessary to fight a prolonged war with the Soviets. At the same time, congressmen noted that U.S. steel, in the form of Japanese bombs, had destroyed (^) Pearl Harbor, thus revealing that exports could both aid enemy governments and drain the United States of (^) scarce military resources.
68. JOHN L. GADDIS, STRATEGIES OF CONTAINMENT: A CRmcAL APPRAISAL OF POSTWAR AMER- ICAN NATIONAL SECURITY PoLIcY 62 (1982) (quoting President Truman).
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- When the President takes measures incompatible with the express or implied will of Congress, his power is at its lowest ebb, for then he can rely only upon his own constitutional powers minus^ any^ constitutional^ powers^ of^ Congress^ over^ the^ matter.^
72
Justice Jackson's opinion, since elevated by the Court into numerous majority opinions, forcefully restored the balance among the branches in making national security policy. 73 Jackson recognized that Presidents could exercise certain ple- nary powers in both domestic and foreign affairs, such as the power to recognize foreign governments. But outside of those narrow constitutional grants, the President was obliged to recognize Congress's important role in setting national objectives. In those areas the President could find safe constitutional ground only when acting pursuant to congressional authorization. 74 Without legislative ap- proval the President sailed into dangerous waters: If Congress had not specifi- cally authorized the action, the question became whether the President had acted in an area of concurrent executive-legislative power. In such circumstances con- stitutional text as well as executive and congressional practice, quasi- constitutional custom, 75 could authorize or prevent presidential initiatives. But if Congress specifically opposed the executive's decision, pushing the case into the third of Jackson's categories, then the President had to cease his activities or seek legislative approval. Youngstown suggested that in all cases involving the economy, the President would have to seek congressional approval for his actions. Jackson acknowl- edged the President's broad power to protect the nation from "the outside world." However, when national security policy involved the economy, Jackson suggested that claim of inherent presidential power must give way to Congress's plenary textual power over domestic and foreign commerce. "But, when [the power] is turned inward, not because of rebellion but because of a lawful eco- nomic struggle between industry and labor... [the executive] should have no such indulgence" from the Court. 7 6^ In Youngstown the Court found that Con- gress had rejected a clause in the Labor Management Relations Act of 1947 granting the emergency power Truman claimed, thereby demoting Truman's
- Id. at 635-37.
- See, e.g., Dames & Moore v. Regan, 453 U.S. 654, 661 (1981) (Jackson's opinion "brings together as much combination of analysis and common sense as there is in this area"); Mistretta v. United States, 488 U.S. 361 (1989) ("Justice Jackson summarized the pragmatic, (^) flexible view of differentiated governmental power to which we are heir"). For a detailed analysis of Jackson's reasoning, from which the following discussion derives, see KOH, supra note 1, at 107-12.
- Thus, Jackson read Curtiss-Wright not as a constitutional decision, raising the broad "ques- tion of the President's power to act without congressional authorization," but as a case that fell into the first of his three categories, involving "his right to act under and in accord with an Act of Congress." Youngstown, 343 U.S. at 635-36 n.2.
- See KOH, supra note 1, at 70 (defining "quasi-constitutional custom" as "a set of institu- tional norms generated by the historical interaction of two or more federal branches with one another *.. [that] represent informal accommodations between two or more branches on the (^) question of who decides with regard to particular foreign policy matters").
- Youngstown, 343 U.S. at 645.
FALL 1992
734 THE INTERNATIONAL LAWYER
action into Jackson's third category. (^) Thus, when national security policies in- volved the economy, Congress's express powers over commerce and the econ- omy preserved its preeminent decision-making role. Often overlooked is that Youngstown not only rejected claims (^) of inherent presidential authority, but also reaffirmed judicial participation in resolving con- tested economic and national security questions. None of the Justices (^) claimed that presidential actions in a state of emergency created political, nonjusticiable questions. Rather than abstain in (^) such circumstances, Jackson warned, courts had the duty to "scrutiniz[e] [claims of presidential power] with (^) caution, for what is at stake is^ the^ equilibrium established^ by^ our^ constitutional^ system.^
' 77
Youngstown shows the Court not only refusing to treat domestic and foreign affairs cases differently, but also refusing to defer to presidential claims of executive, commander-in-chief, or inherent emergency power. 78 Finally, (^) Young- stown shows the importance of public accountability in national security policy. By forcing Presidents (^) to act in the open via the constitutional process, Young- stown (^) allowed public opinion to be the ultimate judge of the wisdom of presi- dential policies. 79
B. PRESIDENTIAL DOMINANCE IN NATIONAL SECURITY
Although Youngstown reaffirmed the constitutional vision of balanced institu- tional participation in economics and national security policy, (^) developments within each branch have promoted a policy trend toward growing presidential dominance. 80 First, the executive has seized the initiative (^) in policy making, primarily because it is the best structured to operate in a unified, swift, (^) and secret manner. Power assigned to Congress, which is (^) often too disorganized for its effective use, will naturally flow "through the inactions, (^) acquiescences, and delegations of that body" to the executive, (^) which can act vigorously and com- prehensively.8 1^ As the world (^) has become increasingly multipolar and U.S. he- gemony has declined, complex and (^) sudden world events have multiplied the occasions demanding quick responses from the executive branch.
- Id. at 637.
- Although some commentators have tried to treat Curtiss-Wright as a foreign affairs case (^) and Youngstown (^) as a domestic labor dispute, such a formalistic distinction proves untenable. Truman's domestic steel seizure was undeniably driven by perceived foreign affairs imperatives, and Curtiss- Wright could just as easily (^) have been characterized as government regulation of a domestic arms sale. In any event, in Dames & Moore v. Regan, 453 U.S. 654 (1981), the entire Court applied Jackson's Youngstown reasoning to judge a quintessential foreign-affairs issue, the legality of the Iranian hostage accords.
- See (^) Youngstown, 343 U.S. at 653 (when the president acts under delegated authority, in Jackson category one, the "public may know the extent and limitations (^) of the powers that can be asserted, and persons affected may be informed from the statute of their rights and duties").
- See KOH, supra note 1, at 117-49.
- Charles L. Black, The Working Balance of the American Political Departments, (^) I HASTINGS CONST. L.Q. 13, 17, 20 (1980).
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