Saturday, June 30, 2012

Supreme Court Ruling on Obamacare

Our boastful and arrogant president has gotten himself in a real pickle. In 2008, when President Obama was elected, he ran on the premise of no new taxes on the middle-class and poor along with the promise of health-care reform. He managed to get his health-care reform done, but recently it has only been upheld under the ability of the government to tax. In other words, the "penalty" is now legally a "tax." It is kind of like having a jug of milk and a bottle of juice, and calling both milk. A penalty is not a tax, as juice is not milk. (Whether the structure of this “tax” even actually conforms with the economic definition of “tax” is another question.)



So now President Obama has to figure out how to call his tax a penalty without looking like a fool (it was fun to watch Jay Carney working on that one the other day). If he calls it a tax, he has levied what is likely the largest tax in history on the lower and middle classes – various estimates on the size of this tax range from one half a trillion dollars to a trillion dollars. These are the people he has repeatedly promised he would not raise taxes on. Or he can continue to call it a penalty (but such a penalty has now been declared unconstitutional.)So now he’s stuck with raising taxes – in a really major way – or essentially declaring his own bill to be unconstitutional. Bummer.

He does seem to be sticking to “penalty;” the mandate was marketed as a penalty and not a tax. If it had been considered a tax originally, that provision would never have been part of the finished bill. Instead, the wording of the bill was changed to “penalty” as a concession to improve its likelihood of passing.

So now we have Obama and SCOTUS arguing like a couple of kids – “My penalty . . .” “No, it’s a tax!” “Penalty!” “Tax!” This is absurd. And unnecessary. SCOTUS wins since they (not the president) define what is constitutional and why. The only way to get rid of the whole mess is to elect a different president and senate, and repeal the whole thing. Maybe Roberts wasn’t so loopy after all (the smirk on the photo that is being published all over seemed really strange at first); maybe he just did it to watch the reactions.

Because of the whole debacle and its not insignificant effect on the economy, health-care will likely be a major issue in the coming campaign. Romney will almost certainly run on a platform of repealing the law, mandate and all, while Obama will most likely run on a platform that contends that the individual mandate is not a tax. What a tangled web we weave.

Besides the fact that the individual mandate is now considered a tax by the Supreme Court (the last word, legally), we now have concrete limitations on the commerce clause and the necessary powers clause, which may prevent the government from overreaching in this area. However, the precedent has now been set that punitive taxation can apparently be blatantly used to manipulate the economic behavior of the public. If you have any affection for free market capitalism, this is arguably a worse travesty than attempting to use punishment to compel people to engage in unwanted commercial activity. Sounds like tons of fun. Repealing Obamacare will not change that one. As Roberts also implied in his ruling, “Elections have consequences.”
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