Critical Condition

NRO’s health-care blog.

Obama’s Lawyer Confuses Himself: Is the Mandate a Penalty or a Tax?


Is the individual mandate a penalty or a tax? That was today’s question at the Supreme Court. Unfortunately for the Court, both the respondents — the states — and the petitioners — the Obama administration — agreed that the mandate was a penalty. So the Court had to hire an outside lawyer, Robert Long, to argue that the mandate was a tax. He didn’t get very far. “I would not argue that this statute is a perfect model of clarity,” Long conceded.

The headline you’ll read in tomorrow’s paper is that the justices seemed nearly unanimous in objecting to the idea that the mandate was a tax. After all, the text of the law itself is clear in describing the mandate as a penalty. And this matters because the Anti-Injunction Act of 1867 prohibits people from suing the government for a tax that hasn’t yet gone into effect. (The individual mandate goes into effect in 2014.) People can sue, however, over a penalty.

Robert Long tried to argue that it doesn’t matter what the text of the law actually says; what matters is what the mandate is meant to achieve, and that the mandate is meant to garner revenue for the government. But Justice Ginsburg shot down that argument: “This is not a revenue-raising measure,” she pointed out, “because, if it’s successful, nobody will pay the penalty, and there will be no revenue to raise.”

The highlight of the session was when President Obama’s solicitor general, Donald Verrilli, got up to articulate the administration’s position, which was that the mandate wasn’t a tax, for the purposes of the Anti-Injunction Act, and yet also that “the minimum-coverage provision of the Affordable Care Act is an exercise of Congress’ taxing power.”

To which Justice Alito said: Huh?

“General Verrilli, today you are arguing that the penalty is not a tax,” Alito said. “Tomorrow you are going to be back, and you will be arguing that the penalty is a tax. Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-Injunction Act?”

“No, Justice Alito,” replied Verrilli.

Verrilli kept misspeaking, describing the “penalty” as a “tax.” “Why do you keep saying tax?” asked Justice Breyer, after which Verrilli started referring to the mandate as a “tax penalty.”

Other justices came up with their own terminology; Justice Ginsburg repeatedly referred to the mandate as a “must-buy provision.”

On a conference call after the session, Virginia attorney general Ken Cuccinelli did not mince words. Verrilli’s gymnastics were “the precursor to the kind of postmodern language twisting the federal government will have to do to win this case,” he said, according to Ben Domenech, who was on the call. “Noah Webster may be the toughest challenge for the feds to overcome in this case.”

You might wonder: If the Supremes are nearly, if not totally, unanimous in their view that the mandate is a tax, why did they bother to hold a day of oral argument on this issue? “It was absolutely essential,” says Georgetown constitutional-law professor Randy Barnett, “once the Fourth Circuit ruled that it was a tax.” Because at least one lower court said that the mandate was a tax, the Supremes had to take up the issue. “Law professors would have jumped all over them” had they not.

For more on today’s hearing, check out the transcript from our live blog. Audio and transcript of today’s SCOTUS session can be found here.

Tomorrow, of course, is the biggest day of all, the day that the constitutionality of the individual mandate is itself discussed. I’ll be back with another live blog tomorrow at Critical Condition, starting at 10:00 am ET. Stay tuned.

— Avik Roy is a senior fellow at the Manhattan Institute, and the author of The Apothecary, the Forbes blog on health-care and entitlement reform. You can follow him on Twitter at @aviksaroy.


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