Up in the air

A few thoughts on the Supreme Court ruling, after reading some commentary today and listening to a Federalist Society discussion forum this afternoon:

- I think this is a terribly disappointing ruling. Obamacare represents a massive expansion of federal power and I thought the individual mandate, at least, was unconstitutional under the Commerce Clause ... which it was, and yet the majority strained hard to find a way to rewrite the actual language to call a "penalty" a "tax" and thus save the law by other means. But there's a real difference between a penalty and a tax, as the dissent points out. A tax is levied to provide revenue for the government, and a penalty is imposed as a punishment/consequence for acting in a certain way (or failing to act in a certain way).  Only certain kinds of taxes can be imposed by the federal government: income taxes, excise/duty taxes, and direct taxes, which are supposed to be apportioned among the states. Paying for failing to have health insurance seems clearly not to fall under any of those listed taxes, and it's structured as a punitive cost for failing to act.  I just don't buy the Chief Justice's argument that the individual mandate is a "tax" as written/structured. If it is, then it seems like just as big an expansion of federal government power as a broad reading of the Commerce Clause would have been. Now if the federal government wants to compel any activity, it can just say "do this or pay a penalty (tax)" -- your "choice". The Court didn't appear to put any limiting principle in place on this power.  Put another way, the taxing power was always extremely broad and fairly unlimited, but you should at least have had to call it a tax and there was something inherently limiting about that (because voters don't like taxes). Now the Court is saying you can structure things as penalties to get the same result without the political consequences to openly calling something a tax. That broadens Congress's authority.

- On the other hand, I heard the argument today that at least people won't be fooled again (well, one would hope) by Congress trying to pass something off as a mere "penalty" when it's really enacting a coercive tax.  So hopefully there is a political limit to the newly-styled power.

- And that leads to a thought on the political fallout: as Mike linked below, the Speaker and the President absolutely insisted when this bill was passed that the individual mandate was not a tax.  The President promised he would not raise taxes on people making less than $250,000 a year.  That was always a bit of a joke, but now it's transparently clear: the only reason the individual mandate was held constitutional today is specifically because it was a tax.  As such, it represents a  tax increase on the American middle class.  Most every American household is going to have to either buy health insurance (where premiums will be rising rapidly, as discussed below), or pay a substantial penalty to the IRS every year.  You're not allowed to choose not to pay so the "tax" either goes to the government or it goes to a private company.  There are multiple other taxes built into the Act that are also going to start hitting in the next two years if they haven't already.  The PPACA is already unpopular with a steady plurality of Americans, consistently by a double-digit margin.  Will calling it a tax really make it more popular?  I think people are going to continue to oppose it and this may galvanize some voters in the fall.

- This Act was always an economic disaster in the making.  Here's a bit of why: most employers will have to either offer approved health insurance plans, or else pay a $2000 (and up) fine to the IRS per employee. Most employers spend more than that on insurance per employee, so the economically rational decision will quickly become to stop offering health insurance and just pay the penalties.  Employees will then be left out to get insurance on their own, and they are required to have insurance (the individual mandate) ... or wait, they too can opt to pay the "tax" as the Court held today.  The economically rational decision for many of them will also be to pay the tax, instead of buying expensive health insurance policies on the open market.  Why?  Because the Act requires that insurance companies can't turn anyone away for preexisting conditions -- which means that many people will only buy insurance when they get sick and need it.  Pay the cheaper fine when not sick, buy the insurance only when you need.  This is not economically viable for insurance companies, who need people to pay premiums on a regular basis whether sick or not to cover the costs of those in a given pool who do get sick over time.  Costs are going to spiral, and who's going to pay for insurance when the companies go out of business?  The government?  That may well be the plan (quite a few Democrats voiced this intention when the bill was passed).  But how many Americans are looking for European style socialized medicine?  That's kind of a disaster in itself.

- I will take a silver lining in the fact that the scope of the Commerce Clause was limited by today's ruling.  Taxes are harder to pass politically and by not allowing Congress unlimited license under the Commerce Clause but requiring them to resort to taxes to achieve some ends, there should be more accountability for congressmen.

- I will also take a silver lining in the fact that the Supreme Court has been largely taken away as  an issue for the left this fall.  The demagoguing and feverish outrage was already at full blast before the ruling when liberals thought they were going to lose the Court ruling today - it would have only intensified in the face of a 5-4 ruling striking the Act.  But 5-4 to uphold, and suddenly all is peachy and Chief Justice Roberts is a model of judicial restraint and modesty.  On the other side, the right can only be more energized, since it was passage of the PPACA that was one of the most important drivers of the Tea Party in 2010.  Now that the only option is to overturn it legislatively, we've got to keep pursuing that option.

- Finally, I note that the many lawsuits pending against HHS for the mandate requiring religious employers to offer insurance policies that cover abortion, abortifacients, sterilization, and contraceptives in violation of their religious beliefs, are still alive in the courts.  Even if Obamacare isn't overturned in its entirety, there is still a hope that religious freedom will prevail in these matters.  I'll do a post on these sometime soon, especially as we are in the middle of the Fortnight for Freedom right now.  St. Thomas More, pray for us!

ETA: a picture of Admiral Ackbar from Reason.com that I found amusing.

Obamacare lives

Just a quick rundown of the opinion today in National Federation of Independent Businesses v. Sebelius, the healthcare law ruling by the Supreme Court that everyone's been waiting for. (Although, several people in my office had no idea it was in the news at all, so ... maybe just law/politics junkies were waiting for it?)  In the next post I'll put down a few of my takeaways.  Stick with me through the summary first ... it was a complicated case!

The Patient Protection and Affordable Care Act (which doesn't protect patients and will in short order bankrupt us, but I digress) was challenged in this case on the individual mandate, the requirement to buy health insurance or pay a penalty; and on the expansion of Medicaid by the states, which involved a requirement for the states to expand their Medicaid funding/services or else be subject to losing all Medicaid funding, not just new funding.  I will just focus on the first issue.  The challengers said that the individual mandate was not authorized by the Constitution's grant of powers to Congress.  The government said it was either authorized under 1) the Commerce Clause, 2) the Necessary and Proper Clause, or 3) almost as an afterthought, the Taxing and Spending Clause.

No lower courts really addressed the tax issue because the PPACA never uses the word "tax" in connection with the mandate - it says buy health insurance or pay a "penalty".  So pretty much everyone thought the mandate would stand or fall based on the Commerce Clause.  The Commerce Clause, which gives Congress the right to regulate interstate commerce, has been read so expansively since the 1930s that there is almost no limit to what counts as interstate commerce -- almost anything can be said to affect interstate commerce in the aggregate.  Even growing wheat for your own family, and not selling it to anyone in state or out of state, can be "commerce" under the famous Wickard v. Fillburn case from the 30s.  But even as broad as this grant of authority has been read, the Court had never found that inactivity could be regulated the same as activity, so theoretically there was some limit to federal government power.  In this case, I would say that not buying health insurance is not an "activity" because you haven't actually done anything.  Some lower courts found Wickard and the line of cases following it were broad enough to make this inactivity count as commerce, though, and some didn't.  So, this should have been the big issue at the Supreme Court.  If it were upheld under the Commerce Clause, that would be huge, and imply there is no limit to what Congress can do (this is where the infamous, "the government can force you to eat broccoli" argument comes from).  On the other hand, if the individual mandate were struck down under the Commerce Clause, that would be a big step to restraining congressional power.  Since it was so key to the PPACA overall -- since if not everyone was forced to buy health insurance, the whole program would be uneconomical -- the next question would have been whether the whole law had to fall or whether it could be "severed" and the rest stand.  The four dissenting justices would have struck down the whole law once they found the mandate was unconstitutional.

Surprising pretty much everyone, the Court did hold 5-4 that the individual mandate was not authorized by the Commerce Clause ... but then Chief Justice Roberts switched his vote to the join the four Court liberals in holding that it was authorized by taxing power.  And since the mandate was upheld, the Court didn't reach the severability question, and the whole Act was upheld.

Why did he do this?  Here's one thing to note: no one I'm aware of ever argued that the PPACA would have been unconstitutional as an exercise of the taxing power.  If Congress levied a general tax on everyone, then gave credits to people who bought health insurance and/or spent the tax funds on its own healthcare programs, I readily concede that would be constitutional.  What the Chief Justice did was to follow a general principle of interpretation that if there is any "fairly possible" reading of a law that would make it constitutional, even if that's not the most natural or obvious reading, then a court should go with that "fairly possible" reading and uphold the law.  He said that in this case, because the IRS collects the penalty, the penalty amount is somewhat tied to income, and one can opt either to buy insurance or pay the penalty, then the penalty could fairly be said to be acting like a tax, and thus it could be a tax.  The law does not use the word tax, and it says people "shall" buy health insurance or pay a penalty, so yes, the most natural reading is that it's a mandate and a penalty ... but it COULD be the case that it is merely imposing a tax for not having health insurance.  Since that is a fairly possible reading that would allow the provision to be upheld as constitutional, he believed he was compelled to read it that way.  Therefore, the mandate was upheld under the taxing power.

As I said, this result surprised pretty much everyone, and there are a lot of conflicting views on how to read the results.  I'll put some of my thoughts in the next post.

Health Care

9.7

The chart below shows the actual unemployment rate in red, and the blue lines represent the White House projections for the unemployment rate with and without the $787 billion stimulus package that was passed earlier this year.

Whoops!

Money for Nothing

Barack Obama was elected on a mandate of change in the November presidential election, and boy has he delivered! After his stern remarks last night in his manufactured press conference, the Democrats (and 3 Republican traitors) did their job this afternoon in passing the stimulus bill.

U.S. Senate Approves $838 Billion Stimulus Package

Feb. 10 (Bloomberg) -- The U.S. Senate approved an $838 billion economic stimulus package, clearing the way for negotiations with the House over a compromise plan that President Barack Obama wants lawmakers to send him within days.

The Senate today voted 61 to 37 to approve its measure. The bill provides $293 billion in tax cuts and more than $500 billion in new spending that the legislation’s supporters call critical to preventing the economy from sinking deeper into recession.

After the Senate added $838 billion (with interest!) to the national debt, President Obama's tax-evading treasury secretary Timothy Geithner did his part to destroy the confidence of the American financial system.

Geithner unveils new bank rescue plan

Creating a private-public partnership to take toxic assets off banks' balance sheets. Policymakers believe clearing bank balance sheets of badly deteriorated loans and securities is a prerequisite for restoring the normal flow of credit into the economy. Geithner said the plan will aim initially to use public financing to create as much as $500 billion in private sector buying capacity, with the prospect of an expansion to $1 trillion down the road.

The U.S. stock market processed both actions today with incredible swiftness:

[caption id="attachment_623" align="aligncenter" width="468" caption="-381.99 (4.62%)"][/caption]

This exchange from Arrested Development pretty much sums up today:

Board Member #3: Why should we believe in you?

G.O.B.: For the same reason you should believe a hundred dollar bill is no more than a hundred pennies!

G.O.B.: They approved me unanimously.

Michael: Why wouldn’t they? You’ve only lost them 99 dollars so far.