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Tax power: The little argument that could—A Commentary by Jack Balkin

The following commentary was posted on CNN.com on June 28, 1012.

Tax power: The little argument that could
By Jack Balkin

Editor's note: Jack M. Balkin is Knight professor of Constitutional Law and the First Amendment at Yale Law School. His latest book is "Living Originalism."

Throughout the two-year litigation over the Affordable Care Act, there was one argument that health care reform's opponents dreaded the most. It was the argument that the so-called individual mandate was not a mandate at all, but a tax. That is the argument that the Supreme Court accepted today in upholding President Obama's health care bill, which can now justly be called "Obamacare" by both its friends and foes.

Here was the problem. If the Affordable Care Act imposed a mandate, it was ordering people to buy insurance, and nobody likes to be told what to do by the government. But if it was a tax, then it actually gave people a choice: Pay a small tax, or buy health insurance. And if you actually read the bill, that's exactly what the law said. The mandate was directed at "taxpayer[s]". Every taxpayer not otherwise exempted had to indicate on their tax return if they had health insurance, and if they didn't, they had to pay a small penalty.

In fact, Congress made things even easier. The only consequence for failing to pay the tax was that your income tax refund would be reduced by a bit. And if you didn't have a tax refund that year, there were no consequences at all!

Congress provided that failure to pay the tax would not result in either criminal penalties or tax liens. Nobody would come after you if you didn't pay the tax. Congress planned to rely primarily on the fact that most Americans understand and accept that they have to pay their taxes.

Moreover, if the mandate was a tax, as the court opinion suggested it was, then its constitutionality was pretty clear. The Constitution gives Congress the power to tax and provide for the general welfare, so the only question was whether Congress could reasonably conclude that taxing people if they didn't buy health insurance promoted the general welfare.

The answer to that question was also pretty clear. Congress wanted to give all Americans a new set of consumer protection rules that prevented insurance companies from denying coverage for pre-existing conditions and imposing lifetime caps on coverage. The only way to make those reforms work, Congress thought, was to get more people in the national risk pool. Hence, Congress decided to give uninsured people a nudge instead of a direct order: It taxed them if they didn't buy insurance. It was a bit like taxing people who didn't install anti-pollution equipment.

Because the taxing power argument was so simple, the opponents of the mandate wanted to avoid framing the debate around that issue at all costs. They wanted to fight only over the question of whether the mandate was permissible under Congress' powers to regulate interstate commerce. If you didn't have insurance, opponents argued, you weren't doing anything, so there was no commerce to regulate.

You have to hand it to the mandate opponents and the Republican Party that supported them. They transformed a law that at worst would reduce your tax refund a bit into the greatest threat to human liberty since the founding of the Republic.

They raised the specter of government-mandated purchases of broccoli. And whenever the taxing power argument was raised -- as it was raised by many constitutional scholars like myself -- opponents tried to change the subject or dismissed it out of hand. One opponent of the mandate told me confidently that for the Justice Department even to raise the tax power argument in court would be professional malpractice.

Ironically, the opponents' biggest allies in this strategy were the Democrats in Congress and President Obama. Back in 2009, before the debt ceiling crisis, the very idea that the country might have to raise taxes to solve the nation's problems was thought to be political poison. Grover Norquist was at the height of his powers. Obama had promised not to raise taxes on the middle class during his 2008 campaign, and he didn't want anyone to accuse him of breaking that promise, even though he just had. Senate Democrats cravenly called the tax a "penalty," even though it actually operated as a tax. When pressed by George Stephanopolous in a November 2009 interview on ABC News, Obama refused to admit that the mandate was a tax, even after Stephanopolous informed Obama that he had actually read the bill and that it looked like a tax to him.

With champions like this, who needs opponents?

The Justice Department, however, argued that the mandate was a tax from the outset. They knew that what politicians said made no difference to the actual constitutional issues. They were professionals, and they wanted to advance every argument that had a chance to win. They fully expected that the case would be decided on the Commerce Clause, because that's what Congress and the president had emphasized, and they thought there was plenty of law to support them. But a few Justice Department officials asked me, Andrew Pincus at Mayer Brown, and Gillian Metzger and Trevor Morrison of Columbia Law School to write an amicus brief on the tax issues to bolster the argument, just in case it was necessary.

We kept submitting different versions of the tax power brief throughout the litigation, in the district courts, in the circuit courts and eventually in the Supreme Court, where we were joined by several other law professors. During this entire time, the debate was structured on terms set by the mandate's opponents. All attention was focused on the Commerce Clause. Over the course of three years -- even before the law was enacted -- I did countless debates and interviews about the mandate, each time emphasizing that this was an easy case under the power to tax. It was no use. Opponents had taken over the terms of debate. The only thing people wanted to talk about was broccoli.

When the case reached the Supreme Court in March, Justice Antonin Scalia played the broccoli card once again. He gleefully noted that Obama himself had said the mandate wasn't a tax. Chief Justice John Roberts wasn't so sure. On the first day of oral argument, he noted that the mandate looked like a tax to him.

Liberals were dispirited by the oral arguments before the court. People piled on Solicitor General Donald Verrilli for taking a sip of water and coughing at the beginning of his presentation. What they didn't know is that Verrilli had quietly beefed up the tax power arguments in his final brief before the Supreme Court.

A few days ago, Intrade thought there was a 71% chance that the mandate would go down. That shows how cleverly and effectively opponents of the mandate had shifted the terms of public debate. But they did so only by hiding the ball and downplaying the most obvious argument for the Affordable Care Act's constitutionality.

When push came to shove, Roberts was unwilling to strike the Affordable Care Act down if there was a perfectly good argument for upholding it. And there was: the tax power argument. Roberts explained that, like the other conservatives, he didn't buy the Commerce Clause theory. Yet when he read the language of the statute, he understood that it could easily be read as a tax. And as a tax, the case for its constitutionality was an easy one. And so he upheld it.

The health care case did make important new law, but not in the area of the individual mandate. The court held that Congress could give states a choice of whether to accept new Medicaid funding but that Congress couldn't threaten to eliminate all funding under the existing version of Medicaid if states refused the deal. Congress could offer those terms if it had made only minor changes to the program, but the new Medicaid program -- extending health care to everyone under 133% of the poverty line -- was sufficiently different in kind from the old program that the states did not have fair warning.

The opponents of the mandate moved a fringe position about the Constitution from off-the-wall to on-the-wall. They successfully shaped the terms of the public debate over the Affordable Care Act. But as Abraham Lincoln once said, you can fool all the people some of the time and some of the people all the time, but you can't fool all of the people all of the time. In the end, the mandate's opponents couldn't fool all of the justices who had actually read the statute. They upheld the Constitution, and the law.