Tag: mandate

Health Care Ruling a Victory for Federalism and Individual Liberty

Today’s ruling vindicates the constitutional first principle that ours is a government of delegated, enumerated, and thus limited powers. Like Judge Hudson in the Virginia case, Judge Vinson recognized that the individual mandate represents an unprecedented and improper incursion beyond those powers: the federal government, under the guise of regulating commerce, cannot require that people engage in economic activity.

And this is as it should be: if the only limit on congressional power were Congress’ own assessment of the wisdom of each assertion of such power, the Constitution would be obsolete – as would any conception of checks and balances. James Madison, the author of the Federalist Paper (51) explaining how man’s non-angelic nature requires explicit limits on those who govern, would spin in his grave. As even would Alexander Hamilton – perhaps the Framer most favorably disposed to strong central power – who cautioned that courts should not be in the business of evaluating the “more or less necessity” of a piece of legislation but rather define judicially administrable rules to guide (but also limit) Congress’s actions.

And so today’s ruling, in a lawsuit that now has 26 states as plaintiffs – with two others challenging the health care “reform” separately – represents the latest and most significant victory for federalism and individual liberty. This will not end until the Supreme Court has its say, but the tide is clearly running in freedom’s favor.

I will comment further once I’ve had a chance to read through the ruling.

ObamaCare Comes Up against the Constitution

Today POLITICO Arena askes:

How badly does today’s ObamaCare ruling set back the Democrat’s signature domestic achievement? Should Tenth Amendment enthusiasts take heart that other federal laws with which state officials disagree can be struck down?

My response:

A quick reading of Judge Henry Hudson’s opinion today striking the “individual mandate” provision of ObamaCare gives hope to those of us who have long urged, more broadly, for a restoration of limited constitutional government. As Judge Hudson put in granting summary judgment to Virginia, “the legislative process must still operate within constitutional bounds.”

The administration had argued that Congress had authority to enact and enforce the individual mandate to buy health insurance under its power to regulate interstate commerce. But Judge Hudson responded that “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.” Indeed, he noted, the administration’s reasoning could apply to “transportation, housing, or nutritional decisions. This broad definition of economic activity [to include inactivity] subject to congressional regulation lacks logical limitation.” The federal government remains, in short, one of delegated, enumerated, and thus limited powers, notwithstanding the leviathan that surrounds us today.

This is a significant setback for the administration, not least because Judge Hudson cites to a similar argument set forth by federal district Judge Roger Vinson in Vinson’s October 14 opinion denying the administration’s motion to dismiss the ObamaCare suit brought against it by 21 states, with more to follow. There will be more litigation on these issues, of course, but for today, at least, the Tenth Amendment and the limited government it implies are alive and well.

Federal Court Declares ObamaCare’s Individual Mandate Unconstitutional

ObamaCare has always hung by an absurdity.  ObamaCare supporters claim that the Constitution’s words “Congress shall have the Power…To regulate Commerce…among the several States” somehow give Congress the power to compel Americans to engage in commerce.  This ruling exposes that absurdity, and exposes as desperate political spin the Obama administration’s claims that these lawsuits are frivolous.

This ruling’s shortcoming is that it did not overturn the entire law.  Anyone familiar with ObamaCare knows that Congress would not have approved any of its major provisions absent the individual mandate.  The compulsion contained in the individual mandate was the main reason that most Democrats voted in favor of the law.  Yet the law still passed Congress by the narrowest of all margins – by one vote, in the dead of night, on Christmas Eve – and required Herculean legislative maneuvering to overcome nine months of solid public opposition.  The fact that Congress did not provide for a “severability clause” indicates that lawmakers viewed the law as one measure.

Despite that shortcoming, this ruling threatens not just the individual mandate, but the entire edifice of ObamaCare.  The centerpiece of ObamaCare is a three-legged stool, comprised of the individual mandate, the government price controls that compress health insurance premiums, and the massive new subsidies to help Americans comply with the mandate.  Knock out any of those three legs, and whole endeavor falls.

Moreover, the individual mandate is not the law’s only unconstitutional provision.

These lawsuits and the continuing legislative debate over ObamaCare are about more than health care.  They are about whether the United States has a government of specifically enumerated powers, or whether the Constitution grants the federal government the power to do whatever the politicians please, subject only to a few specifically enumerated restraints.  This ruling has pulled America back from that precipice.

The Likelihood of Repealing ObamaCare

The political science blog Rule 22 has a post discussing the likelihood of repealing at least some part of ObamaCare.  Author Jordan Ragusa finds:

  • If “the Republicans regain only the House in the upcoming election…the estimated likelihood of at [least] some repeal during the 112th Congress is 52 percent.”
  • If “Republicans regain both chambers in the upcoming midterm…the estimated likelihood of at [least] some repeal is 59 percent.”
  • If “Republicans regain unified control of government in 2012…the estimated likelihood of some repeal in the 113th Congress is 69 percent.”

Ragusa is predicting only that the odds are better than 50-50 that Congress will repeal some part of the law, such as the expanded 1099 reporting, which House Democrats have already moved to eliminate because small businesses find it so onerous.  He is not laying odds on whether Congress will repeal the entire law or its most important and unpopular provisions (i.e., ObamaCare’s individual mandate).

His post does shed light on the likelihood of repealing the individual mandate, however.  As the below graph shows, the probability of repealing any provision of major legislation rises in each of the next five Congresses (i.e., over the subsequent 10 years).  After that point, the probability of repeal begins to fall.

Note that this graph shows the instantaneous probability of repeal.  The cumulative probability is the area under the curve, and increases monotonically over time.  Thus the probability that Congress will repeal some part of ObamaCare by 2020 is more than 13 percent.

Ragusa therefore concludes:

the newly enacted law will be most “at risk” not in the next Congress, but a decade from now.  So sit tight.

Also noteworthy is that Ragusa presents only the probability of legislative repeal.  The prospect that the courts may invalidate all or part of the law increases the probability that some day, ObamaCare will no longer be on the books.

Costly IRS Mandate Slipped into Health Bill

Most people know about the individual mandate in the new health care bill, but the bill contained another mandate that could be far more costly.

A few wording changes to the tax code’s section 6041 regarding 1099 reporting were slipped into the 2000-page health legislation. The changes will force millions of businesses to issue hundreds of millions, perhaps billions, of additional IRS Form 1099s every year. It appears to be a costly, anti-business nightmare.

Under current law, businesses are required to issue 1099s in a limited set of situations, such as when paying outside consultants. The health care bill includes a vast expansion in this information reporting requirement in an attempt to raise revenue for an increasingly rapacious Congress.

In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules:

The 2010 Health Care Act adds “amounts in consideration for property” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(1)) and “gross proceeds” (Code Sec. 6041(a) as amended by 2010 Health Care Act §9006(b)(2)) to the pre-2010 Health Care Act categories of payments for which an information return to IRS will be required if the $600 aggregate payment threshold is met in a tax year for any one payee. Thus, Congress says that for payments made after 2011, the term “payments” includes gross proceeds paid in consideration for property or services.

Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.

Tax CPA Chris Hesse of LeMaster Daniels tells me:

Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.

There appears to have been little discussion before this damaging mandate was slipped into the health bill and rammed through Congress, but a few business groups did raise concerns. Here’s what the Air Conditioner Contractors of America said:

The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services.

In order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.

Private transactions are the core of a market economy, and the source of America’s growth and prosperity. Now the federal government is imposing a vast new web of red tape on perhaps billions of these growth-generating private exchanges.

For what purpose? So the spendthrift Congress can shake a few extra bucks out of private industry? The business sector is the generator of America’s high living standards, but most federal legislators just see it as a kitty to be raided or a cow to be milked dry.

I’m stunned that there wasn’t a broader debate before such a costly mandate was enacted. If it goes into effect, it will waste vast quantities of human effort in filling out forms, reworking computer systems, collecting and organizing data, and fighting the IRS. The struggling American economy can’t afford anymore suffocating tax regulations. This mandate is a giant deadweight loss. It should be repealed.

Mandate Denial

Supporters of ObamaCare are shifting into full-denial mode.

Rep. Debbie Wasserman Schultz (D-FL) recently told an incredulous town-hall crowd that ObamaCare does not, in fact, require you to purchase health insurance.

Rep. Wasserman Schultz’s announcement came as a surprise to those of us familiar with the bill, which added to Subtitle D of the Internal Revenue Code a new Chapter 48, whose first section (Section 5000A) is titled, “REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE” (see p. 126; all-caps in original).  Subparagraph (b)(3) even provides for “PAYMENT OF PENALTY” if you don’t comply with the “REQUIREMENT.”

ObamaCare’s supporters are still looking for ways to hide what they’ve done.

Repeal the bill.

On ObamaCare, Don’t Put Your Faith in the Courts

Now that the Obama health plan is law, more than a dozen states are asserting that Congress has exceeded its Commerce Clause power in imposing a mandate on individuals to purchase health insurance from private companies. No doubt, individual citizens will challenge the individual mandate on their own behalf.

States are also asserting that the threat to withhold all Medicaid payments if the states do not set up health insurance exchanges and enact other regulations amounts to coercion and unconstitutional commandeering of states by the federal government.

No one who opposes ObamaCare should put their faith in the Supreme Court to strike down an act of Congress, no matter how unprecedented and unconstitutional it may be. Nor should those who support ObamaCare be confident that the Supreme Court will uphold these provisions.

Legal challenges cannot take the place of political action. The Court hates to strike down popular legislation, but if the legislation is unpopular, one or both houses of Congress have changed parties and only a filibuster or presidential veto is preventing repeal, then the Court may feel more comfortable upholding the Constitution.

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