Jonah is quite right that much of the argument over Obamacare’s constitutionality will hinge on whether the individual mandate is a “tax” or a “penalty.” Not to be too much of a broken record on this, but I think that’s unfortunate: It assumes that Obamacare is a proper exercise of federal power if the mandate is a tax. The more profound question, and the one that, regrettably, the Supreme Court won’t touch is: For what purposes should the federal government be able to impose taxes in the first place.
The reason this is an issue is the General Welfare clause in the preamble of the Constitution’s Article I, Section 8. Congress can only impose fines or penalties in conjunction with one of its enumerated powers. The one at issue in Obamacare is the power to regulate interstate commerce. Obamacare is an unprecedented expansion of the commerce power because it compels Americans to buy a commodity. That is why many experts think the Court will say it goes too far and strike it down. (for what it’s worth, I do agree that it goes too far, but I do not believe this will prevent five justices on the current Court from doing the wrong thing.) The point is that if Obamacare does not pass muster under the Commerce Clause, Congress has no authority to fine people for non-compliance.
That is not the end of the story, though, because the Court has held that the General Welfare clause is a broader grant of congressional authority than the Commerce Clause. How much broader? We don’t know . . . and that’s the problem.
In my mind, if you buy the progressive theory of the General Welfare clause (as not only Democrats but the vast majority of Republicans in government do), there are virtually no limits at all. That is why I thought that, rather than asking Mitt Romney and the other GOP candidates about the constitutionality of contraception bans that no one is actually seeking, it would have been worthwhile to ask these champions of limited government what, if any, limits there are on Congress’s power to tax and spend for the “general welfare.”
As far as the Supreme Court is concerned, this was an open question until 1936. There were two schools of thought. Hamilton argued that the preamble’s reference to a power to tax to “provide for the . . . general Welfare of the United States” was a separate, substantive source of authority, empowering the government to tax for any purpose so long as it arguably benefited all Americans — i.e., it had to be “general,” not for the good of some at the expense of others. Madison countered that this would defeat the purpose of the rest of Sec. 8 — which, following the preamble, exactingly enumerates Congress’s powers. For Madison, the preamble simply made clear that Congress could tax and spend for the purpose of carrying out these limited grants of authority to regulate interstate commerce, establish Post Offices, establish lower federal courts, etc. Otherwise, the federal government could grow into an uncontrollable monstrosity that spends trillions more than the trillions it takes in in taxes. (Oh, right …).
I think Madison was correct, but the New Deal Supreme Court sided with Hamilton in United States v. Butler (1936) (more on this here). Alas, it appears commentators on the right have little stomach to revisit this conclusion because it would be tantamount to arguing that the welfare state is unconstitutional. Gov. Romney, for example, took umbrage at Gov. Rick Perry’s suggestion that social security is unconstitutional — but he was never asked to explain why he thinks it is constitutional, nor were he, Rick Santorum and Newt Gingrich asked to tell us whether there are any limits on Congress’s General Welfare power.
So we’ll instead play the semantics of “tax” versus “penalty”. It seems like an inconsequential difference — most people just want to know what they have to pay, not whether the government labels the payment a tax, fee, fine, penalty, etc. The semantics are of tremendous consequence only because of the bedrock question that nobody will be asking.