COLAs, the Courts, and the Constitution

Published April 5, 2002

This month, Associate Justices Stephen Breyer, Anthony Kennedy, and Antonin Scalia faced a challenge that any union field organizer could well appreciate. In a little reported opinion, these three justices lamented the failure of their colleagues to join them in taking a case over judicial compensation and reinforcing their position vis-à-vis their employer. In a case filed by federal judges, these three justices saw the case as a challenge to judicial independence by Congress but faced deafening silence from their other six colleagues. Writing a rare dissent in the Court’s declination of review in Williams v. United States, Justice Breyer revealed a solid core of support for reviewing, and possibly reshaping, a fundamental clause in Article III.

On its face, Williams appears rather far removed from the seismic inter-branch conflicts foreseen by the Framers in the Constitutional Convention in 1787. The case was a challenge by various federal judges to the denial of annual cost-of-living adjustments (COLAs) for judicial salaries. From the outset, the case left many judges uneasy about a group of judges asking another group of judges for a decision that would financially benefit both groups. Breyer noted that, even some of his colleagues, were probably reluctant to engage another branch over such a ostensibly self-serving issue. Moreover, judicial positions look like pretty cozy work for most Americans who are struggling with basic health care concerns and low wages. District judges are currently paid $150,000 per year. Appellate judges are paid $159,100. Associate Supreme Court justices are paid $184,400 and the Chief Justice is paid $192,600. Given such base salaries and guaranteed life tenure, complaints over judicial COLAs is hardly a subject that will send large numbers of citizens into the streets in outrage.

In reality, judicial salaries have continued to decline for decades. When inflation is considered, real salaries have declined roughly 25 percent since 1969. That fact has not been lost on many Article III judges who took their job under the belief that the Constitution barred diminishment of judicial salaries. They believed that Congress was manipulating the level of compensation for judges in violation of Article III – a practice that would erode the independence of the judiciary by making them more dependent on the good graces of the legislative branch. While a panel of the Federal Circuit disagreed in a 2-1 vote, a federal district court judge, one appellate judge, and three Supreme Court justices found merit in their arguments.

The separation of powers doctrine is a mere pretense if there is not a body with sufficient independence and authority to block any unconstitutional or unlawful actions of the two political branches. For that reason, the Framers gave federal judges two unique protections in our constitutional system. They are guaranteed life tenure in office that could only be severed through impeachment in the House and a trial in the Senate. They were also guaranteed that their compensation will not be diminished or denied. It is the latter guarantee that was at the heart of the Williams case and the division on the Supreme Court.

There would, of course, be little debate if Congress attempted to slash judicial salaries by 25 percent. Any first-year law student could spot the unconstitutional character of such a direct reduction of judicial compensation. Article III, Section I expressly stated that “The Judges, both of the supreme and inferior Courts, shall . . . receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.” It is clear that the Framers understood that inflation could effectively reduce the value of judicial salaries but decided to leave such questions to the judgment of Congress. The more challenging question has always been collateral, or indirect, reductions through such measures as taxation or benefit changes affecting judicial officers.

One of the most difficult questions seemed to be answered by a judicious move by Congress in 1989. Under the Ethics Reform Act, federal judges were formally protected against reductions in their compensation due to inflation. In this way, Congress dealt legislatively with a gray constitutional question over whether collateral reduction of salaries should be viewed as included in the concept of diminished compensation under Article III. While the Act also prohibited important areas of outside judicial income, Congress guaranteed that the judicial salary rate would be adjusted each year for inflation and be treated in a fashion commensurate with private employees and civil servants. However, in 1995, 1996, 1997, and 1999, Congress acted to block these salary adjustments for federal judges.

One of the reasons that Madisonian democracy has been so successful is that it was crafted by extremely practical men. The subject of increases in judicial salary was a point of contention in the Constitutional Convention. James Madison believed that allowing increases during a judge’s service would create a dependence on the legislative branch. He wanted the compensation clause to read “no increase or diminution shall be made” to a judge’s salary during his service. On July 18, 1787, the issue came to a head when delegates argued that the prohibition on increases be struck from the clause. Governeur Morris insisted that Congress should be given the ability to raise salaries “as circumstances might require.” Other Framers like Benjamin Franklin agreed with Morris. Madison lost and the language was removed. Thus, it was resolved that salaries could not be diminished or reduced but they could be increased by Congress.

While the terminology has changed since 1700s, the concept of inflation adjustment was not unfamiliar to the Framers. For example, Alexander Hamilton specifically raised the effect of inflation on judicial compensation in his contributions to the Federalist Papers. He noted that, while preferable, a fixed rate of compensation could not be included in the Constitution because of “fluctuations in the value of money.” He stated an expectation that Congress would “vary its provision” for judges “in conformity to the variations” in the economy.

Of course, such expectations do not mean that there is a constitutional requirement for COLAs in judicial salaries. Framers repeatedly stressed the need for sufficient salaries and benefits to attract what Charles Pinckney called “men of the first talents.” Yet the level of compensation was left to legislative discretion. What made the Williams case interesting was the fact that these increases had been guaranteed but then suspended for federal judges, a fact of great importance for Justice Breyer and his colleagues in distinguishing Williams from past cases.

The issue of collateral diminishment has come before the Court periodically but recent opinions indicate a growing concern on the Court. In 2001, for example, Associate Justice Antonin Scalia argued forcibly in dissent in United States v. Hatter that Congress violated the compensation clause when it repealed an exemption of judges from Medicare taxes. The denial of COLAs in Williams raised the most compelling challenge to collateral diminishment to go before the Court. This is why dissenters were understandably perplexed by the failure to review the case – regardless of its outcome. Yet, from the outset, this is a constitutional question that should have been avoided by congressional leaders. The value of the Ethics Reform Act was the creation of not just a comfortable financial buffer for judges but a comfortable constitutional buffer for the branches. The act created bright lines for both judicial conduct and legislative conduct. Just as judges were prohibited from certain activities, it was understood that Congress would avoid measures on COLAs that singled out judicial officers.

There is a strong argument for an automatic annual adjustment for federal judges regardless of changes in other federal compensation levels. Due to what Justice Breyer called the “special nature of the judicial enterprise,” uncertainty over such adjustments removes that buffer zone between the branches. It is not good for the system to have judges organize to clamor for such compensation from Congress through the Chief Justice or the Judicial Conference. It is certainly not good for the system to have federal judges file as litigants against another branch.

There are times when constitutional questions are best avoided by the unilateral action of one branch. The mere fact that the Supreme Court denied the petition for writ of certiorari in Williams does not mean that this question is settled. The opinion of these three justices fell one short of a grant of the petition and should concentrate the minds of their counterparts in the legislative branch. Perhaps the majority of the Supreme Court was hoping that its own decision to forego review would encourage a similar accommodating response from Congress in the interests of inter-branch harmony. If Congress continues to tinker with these COLAs, the Court may be close to a major new interpretation of the terms of Article III and create a sharp inter-branch conflict over a comparatively minor budget item. Just as Congress can reverse earlier increases in judicial salaries, a new majority may be emerging to treat benefits like COLAs as locked in by Article III.

We can only hope that, in the future, Congress will tweak the budget in less ominous ways and re-commit itself to the worthy objectives of the Ethics Reform Act. There are many areas of constitutional tension that are unavoidable in the Madisonian democracy. This is not one of them. Call it the adjusted value of justice, but guaranteed and automatic judicial COLAs are a small price to pay for a system that rests ultimately on the service of independent and undistracted judges.