Arizona Gov. Jan Brewer (R) recently set aside her vociferous opposition to ObamaCare’s costly Medicaid expansion by announcing she will support implementing that expansion in Arizona. A significant factor in her reversal, she claimed, was that if Arizona did not expand its Medicaid program, then some legal immigrants would receive government subsidies while U.S. citizens would get nothing.

Brewer’s analysis of this “immigration glitch,” and her remedy for it, are faulty. Fortunately, she, Arizona’s legislature, and its attorney general have better options for stopping it.

An odd and unforeseen result of the Supreme Court’s decision upholding ObamaCare is that, in certain circumstances, the law will now subsidize legal immigrants but not citizens. What triggers this inequity is a state’s decision to implement an Exchange – not the decision to opt out of the Medicaid expansion. (Even if a state implements both provisions, legal immigrants would still receive more valuable subsidies than citizens.) The good news is that states can therefore prevent this inequity simply by not establishing an Exchange. If Brewer wants to avoid this “immigration glitch,” there is no need to expand Medicaid. She already blocked it when she refused to establish an Exchange.

The bad news is that the Obama administration is trying to take away the power Congress granted states to block those discriminatory subsidies, and the punitive taxes that accompany them. Contrary to both the statute and congressional intent, the IRS has announced it will impose that witch’s brew in all states, even in the 32 that have refused to establish an Exchange.

Oklahoma attorney general Scott Pruitt has filed suit to stop that stunning power grab. If Brewer is serious about stopping the “immigration glitch,” the way to do it is by filing a lawsuit similar to Oklahoma’s, while adding a complaint that the Obama administration’s illegal subsidies also violate the Equal Protection clause.

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An oped in today’s Wall Street Journal explains:

How big can a company get with just 50 employees? We’re about to find out.

Thousands of small businesses across the U.S. are desperately looking for a way to escape their own fiscal cliff. That’s because ObamaCare is forcing them to cover their employees’ health care or pay a fine—either of which will cut into profits and stymie future investment and growth…

“Going protean” offers a better strategy for many businesses. Owners of protean companies create a core of strategic employees who manage the big-picture elements of the enterprise—the culture, business model, product mix, vision, strategy, etc. This core then outsources the business tasks to other corporations…

Non-core tasks could include things like accounting, marketing, product development, manufacturing, IT, PR, legal, finance, etc. There is almost nothing that cannot be outsourced…

These new contracts will be a mix of large corporations, small businesses, micro-corporations and even nano-corporations (an individual doing business as a corporation). But to be a protean solution, it must involve a corporation-to-corporation relationship…

In the context of ObamaCare, a small business could go protean by offering current employees contracts for doing their current work as a corporate entity instead of as an employee…

[A]s government continues to impose itself into the marketplace and reduce the freedom of the commercial sector through statist programs like ObamaCare, businesses will have to look for creative solutions to survive. Going protean is only one way, and others will emerge.

Keeping the core company below 50 full-time employees will allow such companies to avoid the employer mandate. But it will also drive up ObamaCare’s cost, because most of the workers in the new corporate entity will be eligible for government subsidies through ObamaCare’s health insurance “exchanges.” This will drive up the cost of ObamaCare wherever those subsidies exist.

If you thought the policy side of the “American Taxpayer Relief Act of 2012” is bad, did you notice that there’s a constitutional problem too? I’m sure there’s more than one, actually, but this one was easy to spot without even digging into the gory details.

Recall that the fiscal cliff bill was first passed by the Senate in the wee hours of New Year’s Day, and then seconded by a vote of the House some 20 hours later. And yet, Article I, Section 7, Clause 1—known as the Origination Clause—states: “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.” 

Far from being “archaic, idiosyncratic and downright evil”—as Georgetown law professor Mike Seidman claimed as part of his argument for throwing out the Constitution altogether—this provision serves, or at least is supposed to serve, the very real and timeless purpose of keeping the taxing power as close to the voters as possible. Mindful of the potential for abuses of this awesome power (see, e.g., John Roberts on Obamacare) the Constitution’s authors chose to give it to the congressional body that is elected every two years directly by people in local districts (the House), instead of the one whose members serve alternating six-year terms and weren’t initially directly elected (the Senate). As Cato adjunct scholar Tim Sandefur explains in a forthcoming law review article (footnotes/citations omitted):

When the Anti-Federalist “Brutus” warned that the taxing power, “exercised without limitation,” will “introduce itself into every corner of the city, and country” and “light upon the head of every person in the United States” crying “GIVE! GIVE!” the Constitution’s supporters answered that this risk was minimized by the political checks over the taxing power. “The exclusive privilege of originating money bills [belongs] to the house of representatives,” wrote Alexander Hamilton.  This would ensure that the power to tax belonged to “the most popular branch” of the government, “the favorite of the people.” James Madison reiterated this point: the “principal reason” why the House was given the power “of originating money bills” was that the Representatives “were chosen by the people, and supposed to be the best acquainted with their interest and ability.” Perhaps the point was put best by George Mason, who considered the Senate “[a]n aristocratic body” which “should ever be suspected of an encroaching tendency,” and believed that “[t]he purse strings should never be put into its hands.”

So what happened last week? Did Harry Reid, John Boehner, and Barack Obama simply agree to ignore the Constitution? (Specifically here, I mean—we know they do generally where federal power is concerned.) Were the House and Senate parliamentarians overruled by a naked political deal?

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