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ObamaCare At The Supreme Court, Day One: Is The Mandate A Tax, Or Not?

The most highly anticipated Supreme Court argument in years opened today after many people had spent the weekend camping out in front of the Courthouse, even amidst a Saturday evening thunderstorm, in the hopes of getting a ticket. Not surprisingly, there was media all over the place, and before the day was over even Rick Santorum had shown up on the steps of the Supreme Court to once again repeat his argument that Mitt Romney was the worst Republican in the country to take on Barack Obama. Inside, meanwhile, the Justices were considering the question of whether a 150 year old law barred them from even hearing the case at this time:

WASHINGTON — The Supreme Court on Monday began three days of epic arguments over the 2010 health care overhaul law with a sort of appetizer — a 90-minute debate over whether the Court yet has the authority to hear the case.

Lawyers for both the Obama administration and challengers to the law took the same side on this question, arguing that the Court could hear the case now. The justices appeared receptive, suggesting that they will reject the argument made by an outside lawyer that it is too soon to rule.

That means they may be expected to issue a decision on the merits by the end of the court’s term in June, just as the presidential election heats up.

The threshold question stems from a 1867 law that holds that Americans cannot challenge a tax until it has been collected. The first penalties for violating the health care law’s individual mandate do not kick in until 2014, and they must be paid on federal tax returns in April 2015.

“This case presents issues of great moment,” said Solicitor General Donald B. Verrilli Jr., adding that the law, the Anti-Injunction Act, “does not bar this court’s consideration of the case.”

The case’s main event — arguments over the constitutionality of the law’s requirement that most Americans obtain insurance or pay a penalty — will not come until Tuesday. On Monday, the justices considered the Anti-Injunction Act, which says that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.” In other words, people who object to taxes must pay first and litigate later.

That is so, said Justice Stephen G. Breyer, because “taxes are, for better or worse, the life’s blood of the government.”

The first penalties for violating the health care law’s individual mandate do not kick in until 2014, and they must be paid on federal tax returns in April 2015. That means, as the United States Court of Appeals for the Fourth Circuit, in Richmond, Va., ruled last year, that courts are for now powerless to decide the law’s constitutionality.

The Obama administration pressed this argument in trial courts but abandoned it on appeal. The challengers to the law have always said the 1867 law poses no obstacle to immediate review.

In the Supreme Court, the administration suggested that the justices appoint an outside lawyer to argue that the 1867 law bars the challenges. The justices asked Robert A. Long to do so, and he went first on Monday.

“I would not argue that this statute is a perfect model of clarity,” Mr. Long said.

He was followed by Solicitor General Donald B. Verrilli Jr., arguing for the Obama administration, and Gregory G. Katsas, who represents the private parties challenging the law.

Mr. Long said the 1867 law was “jurisdictional,” meaning it forbids courts from hearing suits even if, as here, neither side objects.

In the health care law, Congress called the required payment a penalty rather than a tax. But the penalty is contained in the Internal Revenue Code, and the health care law says it is to be “assessed and collected in the same manner” as a tax.

Mr. Verrilli walked a fine line. He has told the court that the administration wants a prompt ruling on the health care law and that the 1867 law should not stand in the way. Yet the administration does not want to damage its ability to rely on the 1867 law in other cases.

There were other complications. Mr. Verrilli’s argument that the penalty is not a tax for purposes of the 1867 law was in potential tension with one he will make on Tuesday, that the mandate was authorized not only by Congress’s power under the commerce clause but also by its power to levy taxes.

“Today you are arguing that the penalty is not a tax,” Justice Samuel A. Alito Jr. said. “Tomorrow you will be back and arguing that the penalty is a tax.”

As Lyle Denniston noted in the post he wrote up after watching this morning’s hearings, though, it wasn’t just the Solicitor General who was being greeted with skepticism from the Court:

When Chief Justice John G. Roberts, Jr., commented at the end of Monday’s first day of hearings on the health care law, “We’ll continue argument on this case tomorrow,” it seemed to have a secondary meaning even if he did not intend it.   The comments and questions of the Justices during the 89-minute exchange left the distinct impression that they are prepared to rule on the constitutionality of the mandate that individuals must buy health insurance, and not push the issue off into the future.  The exact route they would take was a bit uncertain, but their skepticism about taking a pass now was clear.

That did not mean, of course, that the Court would ultimately uphold the mandate.  That is tomorrow’s question, although the Justices asked many questions about the mandate, showing they are deeply curious about its scope and meaning.  But an argument that at times seemed almost to bog down in the dense complexity of the tax code pointed toward a refusal to bar the lawsuits that had challenged the mandate and had put its survival before the Court this week.  One of the telltale signs of that sentiment was that not one Justice, and no lawyer at the lectern, said that it would be premature and a contradiction of the Court’s tradition against deciding constitutional issues prematurely for the Court to rule promptly on the mandate’s validity.

The Court had selected a Washington attorney from outside the case, Robert A. Long, Jr., to make an argument that the Supreme Court and no lower court had any authority to rule on the challenges to the mandate, on the theory that the requirement is a part of the tax code and the Anti-Injunction Act of 1867 had closed the courthouse doors to any lawsuit against a tax law before it took effect.   But the most difficult questions from the bench Monday were aimed at Long’s argument.   And most of the Court seemed to be leaning toward some version or variation of the argument made by Solicitor General Donald B. Verrilli, Jr., speaking for a government that very much wants a final decision soon on the mandate.

(…)

As the argument moved along, Long’s argument seemed to lose more and more of its force with the Justices, and he appeared to have persuaded no one on the bench of his furthest argument — that the AIA was a total bar.   Some of the Justices began picking up on arguments that the challengers had made against the AIA as a bar to their case — including the argument that they were challenging not the tax-like penalty, but only the underlying obligation to obtain health insurance.  Justice Kagan suggested that Congress had intended (as the challengers argued) that the two were separate.

That mood then set the stage for Solicitor General Verrilli’s argument, and while the straddle he was advocating did not draw an enthusiastic embrace, the basic line of his reasoning seemed to be attractive to the Court — that is, that the Court should proceed to rule on the mandate.

It’s not really a surprise that the Justices were skeptical of this argument. As I noted in my post yesterday, only one Court that has considered the PPACA has ruled that the AIA applied, and it came up with that argument essentially on its own since neither side had briefed the issue until the 4th Circuit had specifically requested it. Even in this case, neither the government nor the challengers took the position that the AIA was a bar to proceeding to a consideration of the merits of the law at any stage of this proceedings. For the government, this was an interesting tactical decision only because the AIA is intended to protect the government by forcing taxpayers to wait until a tax has actually been assessed against them, or a refund denied, before they can institute litigation regarding the tax. Had the Administration wished to delay consideration of the law, they could have argued that the AIA applied here, although as we’ve seen that argument has not gotten a very sympathetic reception from the Courts. Keeping in mind my admonition from yesterday about drawing conclusions from the way oral arguments proceed about how a case might turn out, it does seem that the Justices are very skeptical about the argument that the AIA bars them from proceeding to consider the merits of this case. Of course, that could always change after arguments are over and the time comes to consider the case itself. In the end, delaying the matter may be the one things that gets majority support.

One interesting thing that comes from reading through the transcript is the fact that a majority of the Court seems to be very skeptical of the idea that the mandate can be characterized as a tax, which may not bode well for one of the arguments that the Government has advanced to justify the individual mandate itself. In addition to the Commerce Clause arguments that we are all familiar with, the Administration has also advanced the argument that the mandate is justified by the power granted to Congress to tax “the General Welfare.” When this argument has been considered by lower courts, it has either been rejected or the court has declined to rule upon it because it had already found that the mandate was a proper exercise of the power granted under the Commerce Clause. Today, though, there didn’t seem to be much enthusiasm on the bench for the idea that the mandate could be considered a tax for any purpose, whether it’s to justify the mandate or to determine if the AIA applies.

Philip Klein describes Verrilli’s dilemma quite well:

The Obama administration has to thread a difficult needle. U.S. Solicitor General Donald Verrilli argued today that the penalty for non-compliance with the mandate did not function as a tax for the purposes of the Anti-Injunction Act. Tomorrow, he’ll have to argue that it does operate as a tax, and thus is a constitutional exercise of the congressional power to levy taxes.

Justice Samuel Alito asked Verrilli whether he could point to another case in which courts identified something as not a tax for the purposes of the Anti-Injunction Act while still ruling it was a constitutional exercise of taxing power. Verrilli could not name any.

That would seem to indicate that rejecting the tax argument on the AIA would also require the Court to reject the tax argument that will be made tomorrow because, in all honesty, the idea that something can be a tax for one purpose and not another introduces a level of contradiction into the law that the Court usually tries to avoid. If that’s the case, then the Government’s entire case will hinge upon whether or not the Court agrees with their arguments that the mandate is justified by the Commerce Clause and/or the Necessary and Proper Clause. It will be interesting to see how tomorrow’s arguments on the mandate go when it comes to this particular issue.

The audio of today’s hearing is available here, and I have embedded the PDF version of the transcript of the hearing below.

Florida et al v. HHS et al SCOTUS Transcript Day One

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. Of course, why go to the trouble of bringing in an outside attourney to waste a whole day to make a point that neither party to the case is arguing just so you can ignore it? I wouldn’t be suprised if the court, both left and right, is loathe to step into a political controversy in the middle of an election year and that this is setting the grounds for them punt the issue until later.

    Indeed, what if this is setting up a VERY narrow ruling: court rules 9-0 that the mandate is not a tax, and kicks everything else back to the lower courts to reconsider in light of that ruling.

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  2. @Stormy Dragon:

    The courts that have upheld the law have done so based on the Commerce Clause argument, not the tax argument. And the 4th Circuit case that dismissed a case because of the AIA is not before the court in the appeals it is considering at this time.

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  3. @Doug Mataconis:

    So again, why bother with it at all? Some number of the justices wanted this argument made for some reason.

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  4. Xenos says:

    Or they could conclude that the mandate is a penalty duly authorized by the taxing power or Congress, and uphold the law and call it a day.

    Obama has been politically cute, but his opponents are being legally cute. I would put the odds on Obama at this point. Cuteness is much more forgivable as a political sin than a legal sin. If the Supremes tolerate legal cuteness they will give themselves decades of headaches.

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  5. Xenos says:

    @Doug Mataconis: I may be wrong on this, but I am pretty sure that the administration has not yet raised the taxation power argument. It seems too strong for the Supreme Court to ignore it, and the administration would rather the court deal with it sua sponte than have to argue it.

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  6. Hey Norm says:

    @ SD…
    One case challenging the ACA was dismissed on A-IA grounds but it is not before the court today. In another suit that is before the Court today, there is a dissenting opinion by a Judge Kavanagh in which he says that the case should be dismissed because of the Anti-Injunction Act.
    The hearing today on the Anti-Injunction Act is weird because the Government is not arguing for it and of course the plaintiffs don’t think it applies. However the Supreme Court itself decided that it wanted to hear arguments on the issue…so they appointed an outside lawyer to argue the Anti-Injunction Act issue before the court.
    Why? If the court finds that the penalty is a tax, and that the challenge to the mandate is really a challenge to that tax, then the Court could dismiss these ACA challenges on the A-IA grounds.
    Does that answer your question? Or did I mis-understand your question?

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  7. @Hey Norm:

    You’re misunderstanding my question. Doug seems to think that the court isn’t really interested in this line of reasoning and that today’s session was can be largely ignored. I’m just pointing it’s odd to say the court has no interest when the only reason it’s coming up at all if because the court decided to bring it up.

    My speculation is that the court wants an excuse to not resolve this case one way or the other and to let the political branches more time to deal with it, particularly in light of the upcoming elections.

    As you point out, there was no particular reason the court HAD to address the AIA issue right now, so why did they go out of their way to bring it up if, as Doug seems to think, they don’t really care about it?

    Someone (or someones) on the court obviously does care about it, and I have to wonder if this is laying the groundwork for some narrow ruling that allows them to kick the decision back to the lower courts without fulling deciding the constitutionality of the mandate one way or the other.

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  8. I am saying that it’s apparent from the line of questioning that the Court is, at the very least, very skeptical of the argument that the AIA bars consideration of the merits of this case.

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  9. @Stormy Dragon:

    As for why the Court requested that it be argued, I can only imagine that the fact that it has been the basis for the dismissal of one ACA case, and was cited as an argument in another dissenting opinion, caused the Court to have the issue fully briefed and argued so that it could determine if there was anything there.

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  10. @Doug Mataconis:

    I am saying that it’s apparent from the line of questioning that the Court is, at the very least, very skeptical of the argument that the AIA bars consideration of the merits of this case.

    Yes. Which means they can probably get a broadly supported, but narrow, ruling (the sort Roberts loves) on the “is the mandate a tax or a penalty?” issue and kick the whole mess back down to the lower courts for reconsideration without saying anything on the constutionality of the mandate or the severability issue. By the time it works it’s way back up, the election will be long over and hopefully the issue will be a moot point one way or the other.

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  11. @Stormy Dragon:

    I think you’re missing the big picture. The implication from today would seem to be that they’re not looking at the tax issue at all, either in connection with the AIA or as the supposed justification for the mandate.

    It is again worth noting that the “mandate as tax” argument has not been accepted by the courts that have considered it.

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  12. Brummagem Joe says:

    @Doug Mataconis:

    I am saying that it’s apparent from the line of questioning that the Court is, at the very least, very skeptical of the argument that the AIA bars consideration of the merits of this case.

    But this doesn’t mean much does it Doug? Not that I’m in disagreement with your basic point. I find it very difficult to believe they’re going to take a raincheck on this case.

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  13. Hey Norm says:

    No way they take a rain-check on this. What professional turns away from one of the biggest events in their profession?

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  14. @Hey Norm:

    It would be basically the same strategy they took in U.S. v. Jones, where all the ruling actually says is that attaching a GPS to a car is a search, without actually addressing whether it’s a resonable or unreasonable search, whether you need a warrant, etc. all which got kicked back down to the lower courts.

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  15. @Stormy Dragon:

    That was the only question that was presented in the Jones case. It would have been improper for the Court to go beyond it.

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  16. @Doug Mataconis:

    Uh no, that wasn’t the only question in Jones. From the docket:

    Petition GRANTED In addition to the question presented by the petition, the parties are directed to brief and argue the following question: �Whether the government violated respondent�s Fourth Amendment rights by installing the GPS tracking device on his vehicle without a valid warrant and without his consent.�.

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  17. Loviatar says:

    @Xenos:

    If the Supremes tolerate legal cuteness they will give themselves decades of headaches.

    .

    Its amusing that you use the term “legal cuteness” and the Robert’s Supreme court in the same sentence; they are after all famously known for the “legally cute” special provision in their Bush vs. Gore decision.

    The decision was widely criticized for a special provision in the majority opinion, stating that the case did not set precedent in any way, and could not be used to justify any future court decision. It was seen by many as a departure from the stare decisis principle.

    .

    I really don’t think a court that has made a hugely controversial political decision in the past is going to shy away from making a similar controversial political decision because it may cause future headaches. The Robert’s court has shown itself to be a political court and if they can find a fig leaf of cover they will repeal PPACA.

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  18. Brummagem Joe says:

    @Loviatar:

    I really don’t think a court that has made a hugely controversial political decision in the past is going to shy away from making a similar controversial political decision because it may cause future headaches.

    To start it’s a different court, and the fact is the legal implications of Bush v Gore weren’t remotely as far reaching as effectively overturning 70+ years of precedent surrounding the commerce clause. I will repeat that of course it’s not an impossibility by any means but the ramifications of a rejection are so far reaching that the odds are against it. Basically the arguments for predictions of overturning all come down to Roberts, Scalia and co are political hacks. This may be true. If they vote to reject it’s unquestionably a blatantly political decision and I’ll be compelled to agree with you but as of now it’s too soon to make that call.

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  19. Hey Norm says:

    But Joe…
    All they have to do is say “…this ruling is limited to the current circumstances…”
    You are assuming a court of responsible jurists.
    I don’t buy it. I see a court with at least four partisan hacks that are willing to compromise their integrity.

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  20. Racehorse says:

    I would have assumed that the Constitution prohibits the government from forcing anyone to buy anything. If that door is opened, what’s next? Forcing everyone to buy electric cars? Solar water heaters?

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  21. Brummagem Joe says:

    @Hey Norm:

    I don’t buy it. I see a court with at least four partisan hacks that are willing to compromise their integrity.

    Thanks for proving my point Norm. You regard them as bad guys therefore, it’s axiomatic they’ll overturn 70 years of precedent just to score political points regardless of consequences which you say are non existent although a army of lawyers say otherwise. And Norm…you can’t overturn the central premise of the commerce clause and say oh btw it’s just limited to this one case.

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  22. Brummagem Joe says:

    @Racehorse:

    I would have assumed that the Constitution prohibits the government from forcing anyone to buy anything.

    Well three out four appeals courts don’t agree with you. Laurence Silberman doesn’t agree with you. Do know who he is?

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  23. @Loviatar:

    Its amusing that you use the term “legal cuteness” and the Robert’s Supreme court in the same sentence; they are after all famously known for the “legally cute” special provision in their Bush vs. Gore decision.

    That’s pretty amazing given that the Bush v. Gore ruling occured five years before the beginning of the Roberts Court.

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  24. Loviatar says:

    @Brummagem Joe:

    You regard them as bad guys therefore, it’s axiomatic they’ll overturn 70 years of precedent just to score political points regardless of consequences which you say are non existent although a army of lawyers say otherwise.

    1) I don’t consider the current justices bad guys I consider them politicians in another forum. I fully believe they are willing to forgo their oaths and precedence in order to achieve their desired political outcome. I’ve yet to see them act in any other way.

    2) Why after the last 50 years of political chicanery do moderates, independents and centrist – in this case you (Brummagem Joe) – do not believe that a certain portion of the population are wholly bent on achieving their political ends no matter what the cost to our country. They have wholly bought into the concept that the ends justify the means, example #1 for the current group of Supreme court justices – Bush vs. Gore.

    ———-

    @Stormy Dragon:

    That’s pretty amazing given that the Bush v. Gore ruling occured five years before the beginning of the Roberts Court.

    You are correct, I meant the Rehnquist court with Roberts, Scalia, Thomas, Kennedy and O’Connor in agreement.

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  25. Jed says:

    @Loviatar:

    and that the 911 operator told him that a patrol car was on the way and to not pursue Zimmerman

    Still amazing seeing as Roberts was in private practice in 2000. When the 7-2 decision came down and then the 5-4 remedy.

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  26. Jed says:

    Previous comment was supposed to reference this quote from Loviatar:

    You are correct, I meant the Rehnquist court with Roberts, Scalia, Thomas, Kennedy and O’Connor in agreement.

    I’ve got too many windows open at one time. Regrets.

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  27. Racehorse says:

    @Brummagem Joe: Didn’t he have something to do in the Bush administration a few years ago?

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  28. Loviatar says:

    @Jed:

    I’ve got too many windows open at one time.

    You meant you were too busy trying for a gotcha moment. Too bad it was spoiled by your inadvertent reference to the Trayvon Martin case. Better luck next time.

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  29. Jed says:

    @Loviatar:

    Hey, I didn’t ask you to inaccurately characterize Roberts twice, buddy-roo.

    I had the other window open ’cause Doug’s got a pretty screwy setup in the Martin post which I was pointing out and my quotes got crossed. Perfectly understandable.

    Happy hour had nothing to do with it at all. So there. Insert tongue-sticking-out symbol here.

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  30. Brummagem Joe says:

    @Loviatar:

    Why after the last 50 years of political chicanery do moderates, independents and centrist – in this case you (Brummagem Joe) – do not believe that a certain portion of the population are wholly bent on achieving their political ends no matter what the cost to our country.

    As it happens I do believe this to be the case. However, I just don’t automatically assume that this means even justices appointed by Republican presidents are going to just disregard basic legal doctrines. I reject over simplifications whether they are from right or left.

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  31. Brummagem Joe says:

    @Racehorse:

    Didn’t he have something to do in the Bush administration a few years ago?

    Er….no. He’s a noted conservative and highly respected jurist originally nominated to the appeals bench by Reagan. He’s written probably the most respected and robust opinion upholding the ACA’s constitutionality. As it happens he also provides compelling evidence that Loviatar’s Occams Razor approach to the SCOTUS decision is likely erroneous.

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  32. Loviatar says:

    @Brummagem Joe:

    My opinion of these Supreme Court judges is not due to an automatic disregard for Republican appointed judges and my belief that they will vote against PPACA has nothing to do with Occams Razor. Its simple, I’m a cynic.

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