Tag: Constitution

The IRS’s Illegal Employer Tax

With all eyes on the Supreme Court, whose ruling on ObamaCare’s individual mandate could come as early as today, almost no one noticed that last month the IRS imposed an illegal tax on employers of up to $3,000 per worker.

Jonathan Adler and I explain in today’s USA Today that this illegal tax is the indirect but very real result of the IRS offering ObamaCare’s tax credits and subsidies in health insurance “exchanges” created by the federal government, even though ObamaCare restricts those entitlements – explicitly, laboriously, and unambiguously – to Exchanges established by states.

That illegal action has the effect of imposing ObamaCare’s $2,000-$3,000 per worker tax (i.e., the “employer mandate”) on employers who otherwise would be exempt (i.e., employers in states that do not create an Exchange). Perhaps President Obama thought “taxation without representation” would be a winning campaign slogan.

If the Supreme Court fails to strike down ObamaCare’s employer mandate, Exchanges, and health insurance tax credits and subsidies, this thoroughly unconstitutional IRS rule will begin illegally taxing employers in 2014.

Reps. Scott DesJarlais (R-TN) and Phil Roe (R-TN) have introduced a resolution under the Congressional Review Act that would block the rule. Barring that, expect more angry employers to haul ObamaCare into federal court.

Adler discusses the IRS rule here:

Drones, Special Operations, and Whimsical Wars

Asked the last week on 60 Minutes how many shooting wars the United States is in, Secretary of Defense Leon Panetta took a moment to answer. He eventually said we are going after al Qaeda in Pakistan and its “nodes” in Somalia, Yemen, and North Africa. Somehow, he left out the indefinite war we have going in Afghanistan.

It’s no wonder that Panetta can’t keep track of the wars he’s supposed to manage. On top of Afghanistan and the drone campaigns, 12,000 U.S. special operations forces are distributed around dozens of countries, increasingly outside declared war zones, where they train foreign militaries, collect intelligence, and occasionally launch lethal raids. As just reported in the Washington Post, some of these forces are now operating a dozen bases across Northern Africa, where their activities include overseeing contractors flying surveillance aircraft. Despite the Obama administration’s claims of great progress in fighting al Qaeda, the global shadow war shows no signs of abating.

The official rationale for using force across the world is that al Qaeda is global. But that’s true only thanks to a capacious definition of al Qaeda that imposes a sense of false unity of disparate groups. The always-overrated remnant of the organization that sponsored the 9/11 attacks barely exists anymore, even in Pakistan. Our counterterrorism efforts are directed mostly against others: terrorists that take up al Qaeda’s name and desire to kill westerners but have limited links to the real McCoy, as in Yemen and North Africa, and insurgents friendly to jihadists but mostly consumed by local disputes, like the Taliban in Afghanistanal Shabaab in Somalia, and al Qaeda’s Islamist allies in southern Yemen. Like the phony Communist monolith in the Cold War, the myth of a unified, global “al Qaeda” makes actions against vaguely-linked entities—many with no obvious interest in the United States—seem like a coherent campaign against globe trotting menace bent on our destruction.

The real reason we are fighting so much these days is that war is too easy. International and domestic restraints on the use of U.S. military power are few. And unrestrained power tends to be exercised. Presidents can use it whimsically, at least until they do something costly that creates a backlash and wakes up public opposition. Drones and special operations forces made this problem worse.

Most of the world is what the military calls a permissive environment, especially since the end of the Cold War. Most places lack forces capable of keeping our military out. Many potential allies invite it. The risks traditionally associated with war—invasion, mass death, etc.—are now alien to Americans. Since the draft ended, the consequences of even bad wars for most of us are minor: unsettling media stories and mildly higher taxes deferred by deficits. That’s why, as Nuno Monteiro argues, the U.S. military was already quite busy in the 1990s despite the absence of real enemies.

Because war is so cheap, the public has little reason to worry much about it. That leaves elected representatives without any electoral incentive to restrain presidential war powers. No surprise then that the imperial presidency grew as American power did. Technology gains and secrecy exacerbate the problem. Even more than strategic bombing from high altitude, which already prevented U.S. casualties, drones cheapen warfare. Covert raids are riskier, of course, but secrecy limits public appreciation of those risks.

The president and his advisors assure us that they use these forces only after solemn debate and nights spent (badly) reading just war theory. But a White House that debates the use of force only with itself short-circuits the democratic process. That is not just a constitutional problem but a practical one. Broad debate among competing powers generally produces better decisions than narrower, unilateral ones. That is why is it is naïve to suggest, as John Fabian Witt did last week in a New York Times op-ed, that the executive branch is developing sensible legal institutions to manage the gray area between war and peace occupied by drone strikes. What’s needed are checks and balances. That means Congress needs to use its war powers.

First, Congress should rewrite the 2001 Authorization of Military Force, which has morphed into a legal rationale for doing whatever presidents want in the name of counterterrorism. That bill authorized force against the organizers of the September 11 attacks and those who aided them, which seemed to mean al Qaeda and the Taliban in Afghanistan and maybe Pakistan. The new law should state that acts of war, including drone strikes, in other places require a new authorization of force. If Congress is for bombing stuff in Yemen and Somalia, it should debate those missions. Second, Congress should reform the convoluted laws governing the deployment of special operations forces, making their use more onerous and transparent. Those forces should engage in covert action only after a presidential finding, as with the CIA. Third, Congress should require that taxes or offsets fund wars. That would increase debate about their worth.

The trouble, as already noted, is that Congress has no interest in doing these things. Congressional leaders are today more interested in policing leaks about the president’s unilateral exercise of war powers than in restraining them. Short of a military disaster involving special operations forces or drones, this seems unlikely to change in the short term. In the longer term, we need a restoration of Congress’ institutional identity. Even without an electoral reason, politicians should want to exercise war powers simply because they can—because people like power. That’s the assumption behind Edward Corwin’s notion that the constitution’s is an “invitation to struggle” over foreign policy. Something has obstructed Congress’ desire to struggle. Those concerned by the president’s promiscuous use of force should try to identify and remove the obstruction.

Cross-posted from the Skeptics at the National Interest.

Adler on How the IRS Is Rewriting ObamaCare to Tax Employers

Jonathan H. Adler is the Johan Verheij Memorial Professor of Law and director of the Center for Business Law and Regulation at Case Western Reserve University.  In this new Cato Institute video, Adler explains how a recently finalized IRS rule implementing ObamaCare taxes employers without any statutory authority.

For more, see this previous Cato video, “States Should Flatly Reject ObamaCare Exchanges”:

See also our November 2011 op-ed on this IRS rule that appeared in the Wall Street Journal.

NRO Op-ed: IPAB, ObamaCare’s Super-Legislature

Yesterday, Cato released “The Independent Payment Advisory Board: PPACA’s Anti-Constitutional and Authoritarian Super-Legislature,” by the Goldwater Institute’s Diane Cohen and me.

Today, National Review Online publishes our op-ed based on that study. An excerpt:

[U]nder the statute as written, if Congress fails to repeal IPAB in 2017, the secretary must implement IPAB’s edicts even if Congress votes to block them. Nancy Pelosi was right: We needed to pass ObamaCare to find out what was in it. We’re still finding out.

ObamaCare is so unconstitutional, it’s absurd. It delegates legislative powers that Congress cannot delegate. It creates a permanent super-legislature to supplement—and when conflicts arise, to supplant—Congress. It tries to amend the Constitution via statute rather than the amendment procedure of Article V.

ObamaCare proves economist Friedrich Hayek’s axiom that government direction of the economy threatens both democracy and freedom. After decades of failing to deliver high-quality, low-cost health care through Medicare, Congress struck upon the “solution” of creating a permanent super-legislature—or worse, an economic dictator—with the power to impose taxes and other laws that the people would reject.

Fortunately, one Congress cannot bind future Congresses by statute. If the Supreme Court fails to strike down ObamaCare, Congress should exercise its power to repeal IPAB—and the rest of ObamaCare with it.

Cohen is also the lead attorney for the plaintiffs in Coons v. Geithner, which challenges the constitutionality of IPAB and which a federal court has put on hold pending the Supreme Court’s ruling in the individual-mandate and Medicaid-mandate cases.

Cato Study: Heretofore Unreported ObamaCare ‘Bug’ Puts IPAB Completely beyond Congress’ Reach

Today, the Cato Institute releases a new study by Diane Cohen and me titled, “The Independent Payment Advisory Board: PPACA’s Anti-Constitutional and Authoritarian Super-Legislature.” Cohen is a senior attorney at the Goldwater Institute and lead counsel in the Coons v. Geithner lawsuit challenging IPAB and other aspects of the Patient Protection and Affordable Care Act of 2010, a.k.a. ObamaCare.

From the executive summary:

When the unelected government officials on this board submit a legislative proposal to Congress, it automatically becomes law: PPACA requires the Secretary of Health and Human Services to implement it. Blocking an IPAB “proposal” requires at a minimum that the House and the Senate and the president agree on a substitute. The Board’s edicts therefore can become law without congressional action, congressional approval, meaningful congressional oversight, or being subject to a presidential veto. Citizens will have no power to challenge IPAB’s edicts in court.

Worse, PPACA forbids Congress from repealing IPAB outside of a seven-month window in the year 2017, and even then requires a three-fifths majority in both chambers…

IPAB’s unelected members will have effectively unfettered power to impose taxes and ration care for all Americans, whether the government pays their medical bills or not. In some circumstances, just one political party or even one individual would have full command of IPAB’s lawmaking powers. IPAB truly is independent, but in the worst sense of the word. It wields power independent of Congress, independent of the president, independent of the judiciary, and independent of the will of the people.

The creation of IPAB is an admission that the federal government’s efforts to plan America’s health care sector have failed. It is proof of the axiom that government control of the economy threatens democracy.

Importantly, this study reveals a heretofore unreported feature that makes this super-legislature even more authoritarian and unconstitutional:

[I]f Congress misses that repeal window, PPACA prohibits Congress from ever altering an IPAB “proposal.”

You read that right.

The Congressional Research Service and others have reported that even if Congress fails to repeal this super-legislature in 2017, Congress will still be able to use the weak tools that ObamaCare allows for restraining IPAB. Unfortunately, that interpretation rests on a misreading of a crucial part of the law. These experts thought they saw the word “or” where the statute actually says “and.”

How much difference can one little conjunction make?

Under the statute as written, if Congress fails to repeal IPAB in 2017, then as of 2020 Congress will have absolutely zero ability to block or amend the laws that IPAB writes, and zero power to affect the Secretary’s implementation of those laws. IPAB will become a permanent super-legislature, with the Secretary as its executive. And if the president fails to appoint any IPAB members, the Secretary will unilaterally wield all of IPAB’s legislative and executive powers, including the power to appropriate funds for her own department. It’s completely nutty, yet completely consistent with the desire of ObamaCare’s authors to protect IPAB from congressional interference.

It’s also completely consistent with Friedrich Hayek’s prediction that government planning of the economy paves the way for authoritarianism.

Obamacare’s Unconstitutional—-Let’s Implement! No Wait, We’re Not Implementing—-Yes We Are!

The Washington Post reports:

For 14 months, a bipartisan group of 17 states has been quietly collaborating with the Obama administration to help build a foundation for the health-care reform law’s success.

The group includes some of the law’s staunchest supporters working alongside a handful of its bigger detractors. They are backed by $3 million in funding from eight nonprofit organizations that hope to see the Affordable Care Act succeed.

Together, they have come up with a tool to help consumers navigate the health insurance exchanges—the marketplaces that each state is required to have by 2014.

In other words, at the same time Alabama, Arizona, Colorado, and Kansas are suing to overturn Obamacare as unconstitutional, officials in those states are helping to implement the same unconstitutional law.

The Post reports, without rebuttal, several myths about the states’ role under Obamacare. It refers three times to the “tight deadlines” states face under the law. (There are no deadlines. HHS has said that if states decline to create exchanges, they can change their minds later.) It claims, “If a state does not have a framework in place by 2013, the Department of Health and Human Services will come in and do the job itself.” (That’s highly questionable. Obamacare appropriates zero funds for federal exchanges and HHS has admitted it doesn’t have the money.) It quotes Kansas insurance regulator Linda Shepphard as saying, “There is no work being done to build an exchange in Kansas at this point.” (Well, which is it? Is Kansas doing “no work,” or is it “collaborating with the Obama administration”?) I’d say certain state officials got some ‘splaining to do.

In the video below the jump, I explain to state officials why flatly refusing to create an Obamacare exchange is the best thing they can do for their states.

Why ObamaCare Won’t Help the Sick

The Financial Times published my letter to the editor [$]:

Sir, “Imminent ‘ObamaCare’ ruling poses challenge for Republicans” [$] (May 25) doesn’t quite capture my views when it reports that I believe “resurrecting protections for patients with pre-existing conditions would be wrong.” ObamaCare is wrong precisely because those provisions will not protect patients with pre-existing conditions.

Those “protections” are nothing more than government price controls that force carriers to sell insurance to the sick at a premium far below the cost of the claims they incur. As a result, whichever carrier attracts the most sick patients goes out of business. The ensuing race to the bottom will even harm sick Americans who currently have secure coverage.

The debate over ObamaCare is not between people who care and people who don’t care. It is between people who know how to help the sick, and those who don’t.