Friday, June 29, 2012






Short Run Gain, Long Run Danger


He did it again.    Barack Obama comes up a winner.

First, the President offered up Social Security and Medicare as part of the Grand Bargain he tried to negotiate with John Boehner.   Ultimately, Obama and his party were saved from eventual electoral disaster by the decision of the GOP to continue negotiating.

Then the President, seeking to stimulate the economy by the only means- reducing taxes- the Gas and Oil Party would accept, convinced Congress to extend the cut in the employee portion of the payroll tax.     For now, the Social Security trust fund would be replenished by contributions from the general treasury, a transfer of funds which would be ended by a Repub administration.   But as a member of the Social Security Board of Trustees noted,  “When you start funding Social Security that way, you basically destroy any notion that people really paid for their Social Security benefits.     Once we destroy that, we’re going to destroy a lot of the political protections that Social Security has long enjoyed.”   Further, when the program is funded that way, the argument that Social Security (which had paid its own way) contributes to the federal deficit gains credibility.

And now the Patient Protection and Affordable Care Act and its mandate has survived by five to four its ordeal in the United States Supreme Court.    Had the mandate, the wheel around which the spokes of the Affordable Care Act revolve, gone down to defeat, the far-right would have crowed about how Barack Obama and the Democratic Party are destroying the Constitution.

Health care reform lives another day.    But the mandate, Chief Justice Roberts assures us, is not a constitutional expression of the Commerce Clause but of the Taxing Clause.    On his New York Times blog, James B. Stewart reasoned

In this regard, it is like the federal tax on cigarettes. Congress does not want Americans to smoke, so it imposes a tax on those who do. But it is not so high as to make it financially prohibitive for people to smoke; it is not, say, $1,000 a pack. That would be deemed a penalty or fine. Where that line should be drawn in future legislation — between “tax” and “penalty” — is likely to be the subject of intense argument and continuing litigation.

Oh, come now. Congress does not impose a tax on smokers.   No state, to my knowledge, imposes a tax on individuals who smoke.    There is an excise tax on tobacco- or on cigarettes, or on cigars.     The federal government does not determine who smokes and place a surcharge on the income an individual reports on his/her 1040.     And the penalty placed on individuals who opt out of purchasing health care coverage is a penalty or punishment- not a tax, though Roberts maintained that it is a tax by virtue of being so small. As Paul Krugman has put it in a different context, "you could also call an onion a rose. But a non-rose by the same name does not smell as sweet."    Better: you can call an onion a rose, but it's still an onion.

Finding the mandate constitutional (the right conclusion) under the taxing clause strains credulity.    On the Times op-ed page, Richard A. Epstein observes

As a matter of constitutional text, legal history and logic, the power to regulate commerce and the power to tax should not be separated. It is not good for the court or the country that the chief justice’s position in such an important case is confused at its core.

Consider first the constitutional text. Chief Justice Roberts refers to Congress’s power to “lay and collect Taxes.” But it’s worth recalling the surrounding language, which notes that Congress has the power to “lay and collect Taxes” only in order “to pay the Debts and provide for the common Defence and general Welfare of the United States.”


Robert's contention that direct regulation is beyond the scope of the Commerce Clause, Stewart argues

is likely to have far-reaching consequences, and the decision may prove a Pyrrhic victory for liberal supporters of Congress’s expansive power. Some Libertarians, while disappointed that the law was not struck down, were celebrating the stake the court drove into the heart of the commerce clause...

If nothing else, Chief Justice Roberts has probably opened the floodgates to new litigation. With a commerce clause victory in hand, newly emboldened libertarians are shifting their sights to Congress’s broad taxing and spending powers. “It’s the next dragon we have to slay,” Professor Eastman told me.


Ezra Klein suspects Roberts, who votes "with the conservatives on every major legal question before the Court," cleverly rejected the Commerce Clause as basis for the mandate in his drive to impose

limits on federal power. And by securing his own reputation for impartiality, he made his own advocacy in those areas much more effective. If, in the future, Roberts leads the court in cases that more radically constrain the federal government’s power to regulate interstate commerce, today’s decision will help insulate him from criticism. And he did it while rendering a decision that Democrats are applauding.

And few are applauding more than Barack Obama.    Coming up victorious, he no longer looks weak, vulnerable to being pushed around by Congress or the Supreme Court, an asset with impressionable Independents.  In the long run, though, a major price will be paid because Article I, Section 8, Clause 3 was ruled inapplicable to the health care market.    Offering to cut earned benefits (vilified by the President and others as "entitlements"), reducing the tax which supports Social Security, and drawing a false analogy between the federal budget and a family budget will take a cumulative toll.    

Hooray!  For now, Mitt Romney is the loser.     For the future, it may be the cause of progressive government, which Barack Obama has been chipping away at for over three years.





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