ObamaCare At The Supreme Court, Day One: Is The Mandate A Tax, Or Not?
By the end of today's first day of hearings on the Affordable Care Act, the Justices seem eager to take the consider the case on the merits.
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.