Did we win the Obamacare case? No.

July 6, 2012 at 5:08am

My comment on my friend Randy Barnett's op-ed in the Washington Examiner yesterday:





Washington Examiner, Op-ed: Roberts decision didn't open floodgates for 'compulsion through taxation'

Randy Barnett


Memo to Mitt Romney: Obamacare is a tax because the Supreme Court rewrote the law to make it one. The Supreme Court did not uphold Obamacare's individual insurance mandate as a tax.



This is a difficult legal distinction to explain, but one that matters nonetheless.


In Obamacare, the mandate was called an "individual responsibility requirement." To "save" the rest of Obamacare, the Supreme Court deleted the "requirement" part. So the mandate is gone. What's left is a tax.


What's the difference? Under Obamacare, all Americans (who were not exempted) had to buy health insurance. Under the Supreme Court's ruling, no American has to buy health insurance, though some Americans will pay a tax if they don't.


LEVIN:  WHAT?  Under Obamacare, citizens not exempted either buy government-mandated insurance or they are penalized with a fine.  Today, under Obamacare, citizens not exempted either buy government-mandated insurance or they are taxed -- with a fine.  Nothing has changed in this regard.


Under Obamacare, millions of Americans who did not have to pay the penalty because they don't pay any or enough income taxes were still required by law to get insurance or be a law breaker. Under the Supreme Court's revision, they don't.


LEVIN: WHAT?  Millions of Americans who do not meet the income threshold requiring them to get government-mandated health care were considered law-breakers?  This is an odd formulation.  There was no penalty or -- tax, if you will -- if they did not get health-care.  This Rube-Goldberg legislation was passed, in part, to confer benefits on those who do not meet the income threshold.  People who do not participate in a form of welfare, if you will, are not said to be law-breakers even under this atrocious law.  And since the IRS is the main agency tasked with enforcement, since most don't pay federal income taxes, how would these "law-breakers" be affected anyway?  The Court did nothing to clarify this situation.  


Under Obamacare, those Americans who paid the penalty but did not get health insurance were still outlaws because they disobeyed the "requirement." Under the Supreme Court's ruling, if you pay the tax, you're cool with the feds.


LEVIN: WHAT?  Americans who paid the penalty but did not get health care were outlaws, but now if they pay the tax, in which case they're cool with the government?  If you pay the penalty -- or tax, if you will -- you are not an outlaw for disobeying the requirement.  There has been no adjudication, let alone legal charge.  You are not guilty of anything.  You have not commited any unlawful act.  In fact, you are in compliance with government dictates.


Chief Justice John Roberts justified his re-characterization of the "penalty" in Obamacare as a "tax" on the ground that the amount involved is so small as not to be coercive. It merely provided an "incentive," like how Cash for Clunkers provided a $5,000 incentive to trade in an old car. Millions kept their old cars and effectively lost $5,000. The court's opinion implied that, if this "tax" was so high as to coerce compliance, it would then be an unconstitutional penalty.


LEVIN: WHAT?  Incentives in the tax code are not the same as punishments under the tax code.  If anything, this underscores the difference between a penalty and a tax.  In the case of Obamacare, you pay a tax because you refuse to buy a product the government directs you to buy.  Therefore, as Professor Barnett is aware, you are penalized, or taxed, if you will, for inactivity.  If you do not wish to take advantage of a  tax incentive, you are not penalized for inactivity.  You are unaffected.  You pay nothing.  You are not affirmatively penalized or taxed for refusing to trade in your old car.


Which brings me to the biggest difference: Congress, the Obama administration and most law professors defended the mandate as a regulation of interstate commerce under the Commerce Clause. Had this argument been accepted, future Congresses could jack up the amount of the penalty, and add prison time to boot. But a majority of the justices rejected this argument and held that the mandate was not a "proper" exercise of the commerce power. So, in the future, Congress may not punish people who fail to engage in economic activity with a high fine or jail time.


LEVIN: The actual "Opinion of the Court" does not support this claim.  This argument is based on adding together the number of justices who have written that you cannot use the commerce clause as a constitutional basis for compelling activity.  But the proponents of this position are not sure which four justices to add with Roberts's opinion.  The four dissenters specifically refused to join Roberts in an extraoridnary repudiation of his entire opinioin, requiring Roberts to write for himself in this regard.  Thus, those making this claim then turned to the four leftist justices, claiming that now they had joined Roberts in this holding.  In fact, we all know that those four justice were prepared to use the commerce clause to uphold Obamacare and would have preferred such a holding.  Ginsburg even complains in her concurrence that Roberts raised the commerce clause issue at all given that the four leftists on the Court had joined him in his "it is not a penalty but a tax" position.  The commerce clause was not limited in any way, and if this legal issue somehow presents itself to the Court in the future, it will have to be litigated again as it is not settled law.


Roberts' decision made bad law in two respects. First, he claimed the power to rewrite a law by giving it a "saving construction" to uphold it, after he admitted that this was not the best reading of what the law actually said. Second, he allowed that Congress may impose an unprecedented tax on inactivity, provided that it is low enough to preserve the tax payer's "choice" to obey or pay. Both of these maneuvers made constitutional law worse, even if they did save this law in hope of avoiding political attacks on the court.


But the deal that Roberts gave constitutional conservatives was to make constitutional law better in more important ways. He agreed with the four conservative justices that the powers of Congress were limited by Article I of the Constitution; that the Supreme Court would enforce these limits; that the individual insurance mandate exceeded the powers of Congress under the Commerce Clause; that compulsion to engage in commerce was "improper" under the Necessary and Proper Clause; and that Congress could not use its spending power to coerce states into vastly expanding the Medicaid program by withholding existing funding. These are all rulings that 99 percent of law professors had argued against.


LEVIN: The fact that "99 percent of law professors had argued against" these positions is, of course, meaningless.  It would appear that "99 percent of law professors" do not understand the tax provisions of the Constitution, either.  Indeed, few litigants even bothered to address the tax claims made by the administration in various courts.  However, Landmark Legal Foundation and I did.  And severe damage was done to these parts of the Constitution -- a fact perhaps missed by 99 percent of law professors.  None of the taxes the Constitution empowers the federal government to institute had anything to do with the penalty provisions of Obamacare.  Consequently, Roberts refused to identify which applied, the dissent called him out on it, and Roberts dismissed the concern as a debate over labeling.  The reason is none of the taxes authorized under the Constitution apply.  The power to tax was significantly broadened under this ruling.  The Constitution is more than the commerce clause.  The entire document is worthy of judicial fidelity.   


I do not praise Chief Justice Roberts for making this political deal. But neither do I want to throw away all that we won because I don't like what we lost.


And conservatives and libertarians need to stop agreeing with progressives that his ruling gave Congress a green light to impose economic mandates under its tax power. It didn't.


LEVIN: Sure it did, and progressives and Obama will seek ways in the future to do just that.  Giving short shrift to the important issues raised by the dissent, as well as many legal scholars condemning the Obamacare decision and particularly Roberts, does not make it any easier to cope with these issues now and down the road -- both politically and legally.  The Obamacare decision is an awful decision.  The dissent is right, Roberts is wrong.  Perhaps it could have been worse, but it is bad enough.


Randy Barnett, a professor of constitutional law at the Georgetown Law Center, represented the National Federation of Independent Business in its legal challenge to Obamacare. He is the author of "Restoring the Lost Constitution: The Presumption of Liberty" (2005).