Obama On The Topic Of Mandates

Tyler Durden's picture

Earlier, we presented a slightly more idealistic, slightly less gray, slightly less mathematically challenged version of the president talking to ABC's George Stephanopolous on the topic of whether or not the Affordable Care Act should be treated as tax. Obama said "I absolutely reject that notion". The Supreme Court, however, whether with a last minute change of heart by Chief Justice Roberts for whatever reasons, or not, disagreed in what ended up being a shocking hail mary effort, and essentially said that Obama's entire spin campaign of Obamacare as 'not a tax' is wrong, in the process making Obamacare constitutional but also making it the largest tax increase in the history of the US. We are eagerly looking for the CBO's scoring of how the ACA will impact the parabolic charts of projected future US deficit and debt. In the meantime, once again looking back in time, we present an even younger version of the president, all the way back in 2008, sharing his thoughts on the now so very crucial topic of mandates. To wit: "If a mandate was the solution, we could try that to solve homelessness by mandating everybody buy a house. The reason they don't have a house is they don't have the money." He is right. Hopefully, this rather insightful allegory into cause and effect from 4 years ago is not a preamble into what the SCOTUS may have just unleashed with the imminent arrival of the Affordable Housing Act.

Tangentially, for the best unbiased, and politics-free read of today's Supreme Court decision, we recommend the following piece by Reuters' Allison Frankel, titled "SCOTUS: What Congress can't regulate, it can tax." An excerpt:

"It is estimated that four million people each year will choose to pay the IRS rather than buy insurance," the court wrote. "We would expect Congress to be troubled by that prospect if such conduct were unlawful. That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance."

 

In the majority opinion, Roberts raised the question of the propriety of such a tax. "If it is troubling to interpret the Commerce Clause as authorizing Congress to regulate those who abstain from commerce," he wrote, "perhaps it should be similarly troubling to permit Congress to impose a tax for not doing something." But he concluded that's not the right analysis. "The court today holds that our constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity. But from its creation, the Constitution has made no such promise with respect to taxes." The penalty is not a constitutionally barred "direct tax" (an ill-defined term that the Supreme Court has interpreted extremely narrowly), so, according to Roberts and the majority, it passes constitutional muster.

 

In her dissent, Ginsburg asked why the court needed to decide the Commerce Clause issue, since the majority's tax holding meant the law would be upheld regardless of its constitutionality under the Commerce Clause. Putting aside whatever intracourt politics underlie the splintered ruling, Roberts said the more natural reading of the individual mandate provisions of the ACA is that it's a "command to buy insurance," not that it's a tax. For that reason, he said, the Commerce Clause had to be considered first. "It is only because the Commerce Clause does not authorize such a command that it is necessary to reach the taxing power question," Roberts wrote.

Read the full analysis here.