Does Health Care ruling Give Liberals Leverage in Tax Deal Fight?


    by Paul Goldman

    Besides letting Virginia Attorney General Ken Cuccinelli play Captain Ahab well into 2011, today’s ruling by Federal District Court Judge Henry Hudson could give Democratic liberals in the House of Representatives the leverage they need to be relevant in the tax deal fight.  

    How can that be you say? Here’s how. Judge Hudson based his ruling not merely on the Commerce Clause – which has received most of the publicity since this is the battlefield where the fight over the mandatory nature of individual mandate takes place – but also as regards the federal taxation powers contained in the General Welfare clause of the Constitution.

    In order to make sure the individual mandate provision worked, the health care law docked those in violation, but called the money owed to be a “penalty, not a “tax.” This was good politics at the time, but it took away a potential constitutional defense of the law that could have trumped Cuccinelli’s Commerce Clause claim.

    Uncle Sam’s lawyers realized this is early on and tried to walk back what the Congress had said claiming in effect that it was actually tax despite what the law specifically said, or in the alternative,  it was tax no matter what Congress called it since it quacked like a tax, walked like tax, the old whose a duck routine. Normally, a Republican like Cuccinelli would have said – I Told You So! – except this would have cost him the case, since something can be a bridge too far under the Commerce Clause but as constitutional as Marbury vs Madison under the General Welfare provision.

    So KC and his Sunshine band said Congress called it a penalty, and under the normative rules of statutory interpretation, when the legislative body’s intent is clear, the judicial branch is duty bound to follow it. Moreover, as Hudson pointed out, whatever you label it, the “penalty/tax/all of the above” didn’t operate as a revenue raiser in the classic formulation, and in the regard, Judge Hudson had a point in saying that even if Congress had called it a “tax”, it had to be a tax in operation, not just in name.

    Long story short: The Democratic majorities in the Congress, one to disappear totally in a few weeks, still have the votes – if they have the guts – to moot out the points made by Judge Hudson in his ruling.

    Once the new Congress takes over, this will not be an option.


    Enter, thus, if they have the guts they say they have, the Democratic liberals controlling the party’s delegation in the House of Representatives. They have the power to prevent the tax deal from reaching the floor of the House unless they get in return the necessary legislative fixes required to moot out the Hudson decision in the Cuccinelli vs Uncle Sam case.

    But, you ask: Who says the Supreme Court will uphold Hudson, especially since his ruling right now goes against the weight of the other opinions of district court judges around the country?

    This is true, as Judge Hudson’s opinion acknowledges, the Supreme Court, sooner or later, is going to decide the constitutional issues involved. His opinion was well-written and easily understandable. But there would seem to be at least 5 and perhaps 6 Justices who will not be particularly impressed with his legal reasoning on the Commerce Clause as regards the individual mandate.

    However, the question is this: Why take the risk when there is an easy fix?

    In that regard, I refer to the General Welfare part of the opinion since his Commerce Clause analysis, if correct, would take more than 18 days to fix. The tax vs penalty issue would be relatively simple to fix,  although it would take a few 24/7 days to draft an amendment. However, the power of the Congress to use it’s taxing authority in this area is clear, and the operative constitutional test would be one of rationality: is the approach a rational way to achieve the permitted constitutional ends, the courts even have to find it rational if the lawyers for the Congress can’t provide one but the Judges law clerks can! That is to say: the rationality test is the lowest bar, easy for Congress, brutal for a limbo dancer.  

    Admittedly, Republicans in the House would not be happy, and they would shout TAX TAX TAX. But they say that about everything Democrats do. Moreover, Democrats have already suffered as much as they are going to suffer from the political backlash on health care. Politically, to have taken the hits, and then to lose the law, would be a textbook case of lose-lose studied into the year 3011.

    Republicans will of course threaten to filibuster, but Vice-President Biden can rule that a filibuster was never intended to run out the clock on the Congress, it had never been used for that purpose and so he can rule it doesn’t apply in this situation, a position most Americans will agree with.

    The GOP will go ballistic, but most Americans think it is undemocratic and it is going to be changed in the next Congress, so why not do it now?

    Then the amendment can pass with only 50 votes, the tie broke by Biden.

    As Biden can point out, the necessary amendment would not change any of the basic substance of the health care law, rather it would only address the process for making sure the individual mandate provision is fairly but firmly administered. Let’s remember that since it doesn’t go into effect until 2014, such an amendment can provide a lot of flexibility in implementation within the General Welfare clause, it will not affect anyone for years.

    Moreover, Biden can point that by making this technical fix, you are protecting all those who have already benefited under the law but could lose it all if the Hudson opinion is upheld.

    The bottom line: If the issues raised on the General Welfare clause side of the debate by Judge Hudson are mooted out, then his findings on the Commerce Clause become interesting reading but no more. As he notes, the health care law doesn’t have to pass his muster under both provisions: only one will do for government work.

    House Democratic liberals bled hard for the health care law. They say they don’t like the tax cut deal but know it will pass. They say they want to stand up and show they are still relevant.

    Okay, here is your chance while you actually have some power in the system.

    No tax cut deal comes up for a vote  unless the President and the Democratic Senate agree to moot out the General Welfare part of the Hudson decision just in case the jurist finds a few friends he never knew he had on the Supreme Court of the United States.

    It is the prudent choice under game theory: but it is requires not just talking the talk, but walking the walk.                


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