FreedomWorks Foundation Content

Team Obama changes its story — again! — on whether health mandate is a tax

This morning, reversing position yet again, the Obama Administration testified in the House Budget Committee that the ObamaCare health care mandate is not a tax.

President Obama’s acting budget director, Jeffrey Zients, was asked by Republican Congressman Scott Garrett of New Jersey whether the IRS-collected penalty on those who don’t comply with the health care law’s mandate to purchase government-controlled health insurance is a tax. Zients replied, “No.”

Meanwhile, right across the street, in the Supreme Court, officials of the same Administration are telling the Justices the opposite — that the mandate is a tax. On page 52 of the Administration’s legal brief, they declare: 

The Minimum Coverage Provision Is Independently Authorized by Congress’s Taxing Power … The practical operation of the minimum coverage provision [i.e., the mandate] is as a tax law. It is fully integrated into the tax system, will raise substantial revenue, and triggers only tax consequences for non-compliance.  

This Janus-faced posture reminds us that, two years ago, when Congress was debating the President’s health care reform bill, Team Obama was vehemently denying that it was a tax.

So what’s the truth? Is the health care mandate a tax — or not?

And why do these people keep changing their story? 

The Administration’s answer, it seems, is: It depends. If you’re a judge, it’s a tax. If you’re a Member of Congress, it’s not. And that’s our story. And we’re sticking to it. 

Now, if you think these people are being duplicitous, you are right. But if you think they’re crazy, you’re wrong. There’s a method to this madness. 

The Administration is trying to preserve an unpopular health care takeover in a country that solidly opposes that takeover, and in a Supreme Court that could easily find it unconstitutional. And to achieve both purposes, they have to keep changing their story, depending on the venue. 

Under the U.S. Constitution, Congress lacks authority to make people buy a private product like health insurance. But Congress does have a fairly broad power to levy taxes to raise a revenue. So the Democrats have been forced to pursue a clever, if brazenly dishonest strategy. They mandate that everyone buy government-controlled health insurance, but enforce this mandate with an IRS-collected penalty.  This lets them eat their cake and have it: they can tell Congress it’s a penalty, and the courts it’s a tax.

As I say, this is clever. But it’s not very original. They’ve run this play before.

Back in 1935, when President Franklin D. Roosevelt was trying to figure out how to pass Social Security, his advisors ran into a difficulty: the Consitution does not grant Congress a power to create a nationwide old-age pension scheme. After internally debating whether to claim their plan was authorized (a) under the general power to “regulate interstate commerce” or (b) under the even broader power to tax-and-spend (also known as the General Welfare Clause), they decided to go with the former in Congress and the latter in court. 

The record is astonishing. Here, they are telling lawmakers and the public that the payroll tax is a “contribution” for “insurance.” But over here, in the Supreme Court, they are solemnly assuring the Justices that it is nothing of the kind, that there is in fact no connection at all between the payroll tax and the old-age pension! 

And it worked. 

That was 1935. This is 2012. 

Burn me once, shame on you. Burn me twice . . .

FreedomWorks is determined not to let them get away with this duplicitous strategy.

Either it’s a tax or it isn’t. Either it’s constitutional or it isn’t. 

We hold that the Democrats’ health care mandate is clearly unconstitutional because it exceeds Congress’s power under the Commerce Clause, and is also not a valid exercise of the power to tax.

While as an economic matter the mandate does have an effect similar to that of a tax, as a legal matter it is not one. Its primary purpose is not to raise a revenue but to coerce people. That makes it a penalty masquerading as a tax. 

Vital fights like this are why FreedomWorks Foundation has launched a new project: the Constitution Defense Fund. Two days ago, as its first act, the Fund filed a legal brief with the Supreme Court in the ObamaCare case. To learn more about this new effort, click here.

Help us make this the Last Year of ObamaCare! 

Dean Clancy is FreedomWorks’ Legislative Counsel and Vice President, Health Care Policy

Related Content