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September 21, 2009

If Individual Mandate Isn't a Tax, Is It Still Constitutional?

During the BusHitler years the oft repeated ne plus ultra of argument enders was, "We are all entitled to our own opinions, but we are not entitled to our own facts."

What a difference an election makes! So many Lefty memes are falling by the wayside these days. It's enough to make the Founding Fathers cry.

These days, once patriotic dissent is now regarded as the lowest form of domestic terrorism. Real Americans can't wait to trade essential liberties for temporary security and if your name happens to be Barack Obama, you can not only make up your own definitions, but your own facts as well!

In the most contentious exchange of President Barack Obama’s marathon of five Sunday shows, he said it is “not true” that a requirement for individuals to get health insurance under a key reform plan now being debated amounts to a tax increase.

But he could look it up — in the bill.

Page 29, sentence one of the bill introduced by Senate Finance Committee Chairman Max Baucus (D-Mont) says: “The consequence for not maintaining insurance would be an excise tax.”

And the rest of the bill is clear that the Finance Committee does, in fact, consider it a tax: “The excise tax would be assessed through the tax code and applied as an additional amount of Federal tax owed.”

The bill requires every American, with few exceptions, to carry health insurance. To enforce this individual mandate, the Senate Finance Committee created the excise tax as a penalty for people who don’t have insurance – and it can run as much as $3,800 a year per family.

The House bill also refers to the penalties for not carrying insurance as a tax. It calls for a “tax on individuals without acceptable health care coverage” and amends the tax code to implement it.

Yesterday whilst watching the President of these United States school the vast reich wing noise machine, the Editorial Staff could not help wondering whether it was really wise to undercut what is arguably the strongest argument for the constitutionality of the individual mandate: Congress' power to tax and spend to promote the general welfare?

The Potomac atmosphere in early 1935 was one of importunate enthusiasm--of aggressive confidence, too, with one great exception. That exception, which colored the thinking of even the lowliest contributor to policy making, was grave uncertainty as to the Supreme Court's view of the constitutionality of New Deal legislation. To be sure, the Schechter decision, which invalidated the NRA and provoked President Roosevelt to angry comments about the "horse-and-buggy Court," was not handed down until late May. Long before that, however, all of us working to prepare social insurance legislation were aware of the constitutional difficulties involved. A young lawyer saddled with more responsibility than he should have accepted (I not only accepted it, I clung to it) was unceasingly conscious of the threatening shadow cast by the Constitution or the justices or both.

... Hostile newspapers--which comprised most of the press--promptly assailed the new bill as a hodgepodge, an ill-drafted legislative monstrosity. Their criticisms on this score were uninformed. The chief complaint was that various subjects were scattered throughout the measure: thus, one chapter, or title, imposed a tax for old age insurance while the provision for old age benefits appeared in a separate title many pages distant. The critic did not know--or perhaps they did--that this awkward arrangement was deliberate. It was designed to make it easier for the Supreme Court to sustain the measure's validity--not to fool the court but to give the justices a technical peg on which to hang their hats if they so desired.

...The bill became law on August 14, 1935. And still no one could be sure that it would last. Was it constitutional? Certainly its welfare provisions, grants-in-aid to the states, were valid, but what of unemployment compensation and old age insurance? In regard to unemployment compensation I had been tiresomely insistent during the drafting of the bill in proposing a federal tax on employers which would be "forgiven" to the extent that the employers paid contributions into state unemployment compensation funds. I was insistent because there was a judicial precedent for upholding this method of persuading the states to act and because Justice Brandeis had casually mentioned that precedent to his son-in-law, a leader in the unemployment compensation movement in Wisconsin. With respect to old age insurance, the Constitution gives the Congress power to tax and spend for the general welfare. But was a particular tax on employees, who would eventually be paid benefits in amounts measured by the taxes they had paid, a proper exercise of this congressional power? Or was it an attempt to establish a compulsory retirement insurance system, and if so, was it beyond the authority of Congress? We could not know the answers to these questions until a May morning in 1937, when Justice Cardozo began to read the court's opinions upholding both phases of the Social Security Act.

Few Americans now recall that in the months leading up to the Court's review of the Social Security Act, judges had been striking down one New Deal law after another. Even fewer Americans remember FDR's response to this judicial defiance:

Enraged, Roosevelt decided to subdue the Court. His megalomania inflated by his 1936 landslide, on February 5, 1937 he abruptly asked Congress to enact a bill empowering him to appoint one additional Justice for every one who turned 70 and did not retire, for a maximum of six, thus enlarging the Supreme Court from nine Justices to up to fifteen.

A firestorm ensued. Critics rightly called Roosevelt’s proposal a plan to pack the Court. Even liberals who deplored the Court’s decisions, including many congressional Democrats, opposed it.

Its arm cruelly twisted by Roosevelt’s threat to its independence, the Supreme Court began surrendering in self-preservation.

An aging Supreme Court, intimidated by Roosevelt's threats, capitulated and refused to declare Social Security unconstitutional. But the important point here is the argument provided by Justice Cardozo in the majority ruling (which, by the way, largely relied upon the administration's case that Social Security was a valid exercise of Congress's spending power):

... There are about two pages of actual argument, that Congress may spend money to promote the general welfare; that what the general welfare is changes with the times, and that the Depression had made old-age poverty a national problem; that Congress didn’t arbitrarily decide that old-age benefits would promote the general welfare, but drew on documents and hearings; that the wisdom of old-age benefits is for Congress to decide, not the Court; and that the concept of general welfare is for Congress to decide, not the states. The first two of these, occupying about three-quarters of a page, use language resembling the brief’s. Altogether, of twelve pages, there are almost nine of description, six of them essentially lifted from the brief; about a page on miscellany; and roughly two pages of constitutional argument, of which about three-quarters of a page is largely from the brief.

Regarding whether Titles II and VIII together were an invalid old-age insurance scheme, Cardozo merely noted Davis’s argument that they dovetail so as to justify concluding that Congress would not have passed one without the other, and the government’s opposing position that Congress could spend the revenue as it willed. "We find it unnecessary to make a choice between the arguments, and so leave the question open." So the Court ducked the core issue of whether Social Security is an unconstitutional government insurance program. Why?

...The majority of the Helvering v. Davis majority, Hughes, Roberts, Van Devanter, and Sutherland, were conservatives. Most had bitterly criticized the New Deal. Can anybody really believe that they found Cardozo’s half-baked opinion, mostly lifted from the Administration’s brief, an adequate expression of their views on Social Security’s constitutionality?

McReynolds and Butler dissented – but wrote no opinions. Did they have nothing to say? Or were they afraid of Roosevelt?

If we are to believe President Obama, the individual mandate is not a tax. But if it is not a tax, whence comes Congress' power to force individuals to buy health insurance? The other commonly cited grounds for an individual mandate is the Commerce clause authority to regulate matters which substantially affect interstate commerce. Ilya Somin points out the flaws in that interpretation:

Looking at the text of the Constitution, the Commerce Clause merely grants Congress the power to regulate "Commerce ... among the several states." Choosing to purchase (or not purchase) health insurance is not interstate commerce, if only because nearly all insurance purchases are conducted within the confines of a single state. Obviously, the decision to purchase health insurance may well have an impact on interstate commerce... If the Commerce Clause really gave Congress the power to regulate any activity that merely affects interstate commerce, most of Congress' other powers listed in Article I of the Constitution would be redundant.

How smart is it to undermine one of the strongest arguments for the constitutionality of the individual mandate? It's beginning to look as though foreign policy may not be the only arena in which our President is out of his depth.

Posted by Cassandra at September 21, 2009 12:47 PM

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"...because as I’ve said about two-thirds of what we’ve proposed would be from money that’s already in the health care system but just being spent badly,” Obama told CBS’s Bob Schieffer on “Face the Nation.”

ObamaCare is going to run nearly $900 billion dollars -- and Obie just said that $600 billion is *there*, but it's just being misspent?

*waving the bullsh*t flag*

Posted by: BillT at September 21, 2009 02:48 PM

...foreign policy may not be the only arena in which our President is out of his depth.

He'd be out of his depth in spit.

Posted by: BillT at September 21, 2009 02:56 PM

"So the Court ducked the core issue of whether Social Security is an unconstitutional government insurance program. Why?"

To leave it for a later SCOTUS, freer of the political pressures of the day.

That's the door, then.

Posted by: Grim at September 21, 2009 03:02 PM

The way that I perceived this before Cassandra's erudite column was:

No, the mandate was not a "tax", but it was un-constitutional. The Federal Government cannot mandate individual choices. Period. Full stop. Even a wise Latina Lady might be careful about say "Si!" to this steaming pile of......

But, if the Senate has carefully defined this as a "tax", then of course, they have precedent to do this sort of thing. A kinda bad precedent has been set, as illustrated by the analysis of 1935 jurisprudence (just like campaign finance reform, huh?).

But if so, then Obama is wrong. Criminy, has he even read Baucus' Bill?

Can we have it both ways? Will Jane Hamster's head explode? Does Andrew Sullivan smoke pot on the beach? Tune in tomorrow for another episode of "Obama....Believe It or Not?!"

Paging spd rdr; will Mr. Rdr please report to the internet, please? We have a question......

Posted by: Don Brouhaha at September 21, 2009 05:27 PM

Cassandra was having major problems getting a post done today, Don :p

I don't know if it's a tax or not, strictly speaking. What I find bizarre about Obama is that he won't admit there's any room for legitimate debate on the topic. He actually said, "No one seriously thinks this is a tax".

I guess, however, that if you define everyone who disagrees with you as a "no one", there might be a grain of truth in there somewhere. What a maroon.

Posted by: Cassandra at September 21, 2009 10:12 PM

Obama has this Orwellian nature about him, and his enablers allow him to redefine words and meaning all the time.
He's not lying, he is just constantly redefining reality, day to day. Pretty slick trick if you can pull it off.

"I guess it depends on what the meaning of 'is', is."

Where have we seen this before?

The deeply disturbing part about all this is that it is really all about power. The agenda, the "progressive" politics, all the populist rhetoric is really about getting power and using it. The old Marxist truism, "the ends justify the means", still holds, but the so-called "health care debate" and all the other ensueing actions are the "means". The simple minded activists that support Obama think that these are the "ends". In using these means, he will flatten every principle and law that he can, because the "ends" are really just power. And the so-called Progressives will help him. Just listen to their words. They'd sanction unconstitutional takings; strip the freedom of the press to suppress disagreement; Congress has and will surrender all kinds of powers, they have already surrendered oversight of the Executive.
It's happening right in front of us. Their childish fears of the Patriot Act bogeyman are childish fantasies by comparison. And this is how Republics die.

Power for powers's sake. The Constitution is, after all, just a piece of parchment. It has no real power of its own unless those that administer the law really believe in it as a guiding principle and intellectual force.
And Obama doesn't; not really.

Posted by: Don Brouhaha at September 21, 2009 10:43 PM