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Channeling U.S. Rep Joe Wilson, the Republican from South Carolina who shouted "You lie!" during President Barack Obama's speech to Congress in September, the Republican Party of Texas has accused the president of lying when he said that a new federal mandate requiring individuals to have health insurance was not a tax.
"You lie!" the party tweeted July 19. "Obama said O-care mandate wasn't a tax. Now Obama admin says it is a tax."
Did the Obama administration talk one way and then the other?
Per the legislation that Obama signed into law in March, most people will be required to have health insurance starting in 2014. There are exceptions, but individuals who aren't exempt and refuse to join a plan will be required to pay an annual penalty of $695 per person, up to a maximum of $2,085 per family, or 2.5 percent of household income, whichever is greater. The health care law calls the fine individuals must pay if they don't have insurance a "penalty."
In a Sept. 20, 2009, interview with ABC's George Stephanopoulos, Obama denied that the mandate to buy health insurance was equivalent to a tax. "For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase," Obama said. He noted that Americans are required to have auto insurance, but nobody considers that a tax increase. (Auto insurance is a state mandate, but all the states except New Hampshire require it of resident drivers.)
When Stephanopoulos pressed Obama on whether the mandate was a tax, Obama said: "I absolutely reject that notion."
However, on July 16 The New York Times published a story that seemed to vindicate opponents of the health care overhaul who argued that the insurance requirement was a tax. The headline: "Changing stance, administration now defends insurance mandate as a tax."
Texas is one of 21 states challenging the law's constitutionality in court, but Virginia was the first to face the federal government in a July 1 hearing on its lawsuit. The New York Times pointed to a brief filed in that case by the U.S. Department of Justice defending the individual mandate as "a valid exercise" of the federal government's "power to lay and collect taxes." Congress can impose taxes to provide for the "general welfare" under Article I of the Constitution.
From the health-care law: "The requirement regulates activity that is commercial and economic in nature: economic and financial decisions about how and when health care is paid for, and when health insurance is purchased." The law then says that national health spending is projected to increase from $2.5 trillion — 17.6 percent of the economy — in 2009, to $4.7 trillion in 2019.
In its legal brief, the department says the penalty is also a tax because it will raise revenue — $4 billion a year by 2017, according to the nonpartisan Congressional Budget Office — and because it's imposed and collected under the Internal Revenue Code. Individuals who refuse to obtain health insurance and are penalized will have to report the fine "as an addition to income tax liability," the brief says.
The health care law itself doesn't mention Congress' taxing authority, instead noting that the mandate is protected under the Constitution's Article I "commerce clause," which lets Congress regulate commercial activity that has a substantial effect on the national economy.
"The tax argument is the strongest argument," the Times quoted Jack Balkin, a professor at Yale Law School who supports the law, saying. "This bill is a tax. Because it's a tax, it's completely constitutional." Balkin is also quoted saying that Obama "has not been honest with the American people about the nature of the bill."
White House spokesman Matt Lehrich defended the law both ways last week, telling us: "We believe that the Commerce Clause provides ample constitutional authority for the individual mandate. If anyone has any doubts about that — and we don’t think they should — it’s also clear that that the mandate is constitutional under Congress’s power to tax."
Similarly, Steven Schwinn, an associate professor of constitutional law at the John Marshall Law School in Chicago, pointed out on his blog July 18 that the Obama administration has consistently defended the mandate in court primarily under the Commerce Clause, and secondarily under Congress' taxing power to promote the general welfare.
Henry Aaron, a scholar who specializes in health care and tax policy at the liberal-leaning Brookings Institution, said Obama was correct to say the mandate isn't a tax. "A mandate is meaningless unless it is backed up by some 'or else,' as in 'obey the mandate or else,' " Aaron said. "The administration asserted the legal power to impose a mandate. The mandate is backed up by a tax that has to be paid if the mandate is violated. You obey the mandate or you pay the tax."
Upshot: In his interview with Stephanopoulos, Obama insisted the mandate to purchase health coverage is not a tax. But in defending its legality, the Justice Department argues in part that the mandate is a valid exercise of Congress' taxing power.
From where we sit, Obama was trying to make a political point; the Justice Department, a legal one.
In its tweet, the Republican Party overreaches when it says the administration now calls the mandate a tax. The administration (still) isn't doing that. But it does cite Congress' power to levy taxes as authority for the mandate.
And that enables the GOP to score its own political point, based on what looks like the administration's runs at having it both ways.
We rate the GOP's recap of Obama's early position and his administration's recent defense of the law as Mostly True.
CNN.com, Rep. Wilson shouts 'You lie' to Obama during speech, Sept. 10, 2009
Republican Part of Texas Twitter feed
ABC News, Transcript and video from Obama's interview on This Week, Sept. 20, 2009
Department of Justice's memorandum in support of the defendant's (Health and Human Services Secretary Kathleen Sebelius) motion to dismiss Virginia's suit, filed May 24, 2010
Department of Justice's memorandum in support of the defendant's (Department of Health and Human Services) motion to dismiss Florida's suit, filed June 16, 2010
Investor's Business Daily, ObamaCare's mandate is not a tax, except when it is, July 17, 2010
The New York Times, Judge hears arguments on health overhaul challenge, July 1, 2010
The New York Times, Changing stance, administration now defends insurance mandate as tax, July 16, 2010
Constitutional Law Prof Blog, Health insurance mandate: Commerce or "tax"? July 18, 2010
E-mail interview with Bryan Preston, communications director, Republican Party of Texas, July 19, 2010
E-mail interview with Matt Lehrich, White House spokesman, July 23, 2010
E-mail interview with Henry Aaron, health care scholar, Brookings Institution, July 27, 2010
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