This is a story of austerity's influence on constitutional doctrine. Outside the narrow community of federal jurisdiction aficionados, people seem to pay attention to state sovereign immunity about every hundred years. In 1793, the Supreme Court decided Chisholm v. Georgia, (1) holding that a state could be sued by an individual in federal court for nonpayment of a debt. This made people so angry that Congress proposed and the States ratified the Eleventh Amendment two years later, overruling Chisholm and enshrining some degree of state sovereign immunity (exactly how much is disputed) in the Constitution itself. (2) In the 1880s and 1890s, the Court decided a series of important immunity cases, chief among them Hans v. Louisiana, (3) generally expanding the States' immunity beyond the confines of the Amendment's text. And in the late 1990s and early 2000s, the Rehnquist Court issued a string of expansive state sovereign immunity decisions, holding, among other things, that Congress could not override the States' immunity by statute. (4) These decisions arguably formed the keystone of that Court's "federalist revival" (5)--a broader movement to reinvigorate constitutional limitations on national power generally. (6) But whatever the relation of those cases to broader trends in federalism jurisprudence, state sovereign immunity is a sort of constitutional comet, streaking across the sky once a century to the amazement and consternation of legal commentators.
The comet's first two appearances coincided with potentially catastrophic state debt crises. The first involved the States' Revolutionary War debts, while the second involved a mass of Southern debts as well as the political fallout from Reconstruction. In both eras, sovereign immunity blocked serious, perhaps existential, threats to the public fisc. This history highlights the fact that, as John Orth observed, the Eleventh Amendment has always been "a dollars-and-cents proposition." (7) When the Rehnquist Court set out to expand sovereign immunity in the 1990s, however, no comparable financial threat to the states was looming. Rather, the Court argued for state sovereign immunity as a matter of constitutional fidelity--a way to assert the sovereignty of state governments in an age of expansive national supremacy.
The current Court's state sovereign immunity jurisprudence suffers from significant internal confusions and a barrage of external criticism. (9) I argue in this Essay that much of the problem arises from the Court's effort to decouple the doctrine of state sovereign immunity from the practical imperatives that have historically enjoined recourse to it. Sovereign immunity is one of the Constitution's austerity mechanisms: It rarely allows governments to avoid their obligations entirely, but it does confer a degree of discretion on government officials as to how and when they will comply with those obligations. (10) But our constitutional culture does not easily tolerate departures from the principle that rights require remedies, (11) and the strong medicine of sovereign immunity generally will lack legitimacy in the absence of compelling public need.
Ironically, the Rehnquist Court's revival of state sovereign immunity might simply have come fifteen years too soon. As a result of both the "Great Recession" of the last several years and, perhaps more importantly, long term mismanagement of pension and healthcare obligations, the states are once more in crisis. According to Michael Greve, "Deficits for the current budget cycle are estimated at $175 billion. In some states (Texas, California, Nevada, and Illinois), the shortfall exceeds 30 percent of projected budgets." (12) The long term picture is considerably worse: "Unfunded pension obligations are estimated at upwards of $1 trillion and are probably three or four times that amount. Unfunded health care commitments clock in at upwards of a half trillion. Bond debt issued by state and local governments comes in around $2. …