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Friday, February 04, 2011

An economist's view of what is (charitably) called "legal reasoning"

Mark V. Pauly, Wharton School economist, is famous for cooking up the individual mandate at the behest of Republicans who wanted to preserve private insurance from governmental control of health care. Putting aside the well-known ironies of that fact for the moment, here's what Pauly has to say about the constitutional argument against the Individual Mandate:

I’m not an expert on the Constitution. My fix would be to simply say raise everyone’s taxes by what a health insurance policy would cost -- Congress definitely has the power to do that -- and then tell people that if they obtain insurance, they'll get a tax break of the same amount. So instead of a penalty, it’s a perfectly legal tax break. But this seems to me to angelic pinhead density arguments about whether it’s a payment to do something or not to do something.

Three quick points:
(A) He's right about the "fix", no?
(B) If Pauly is right that precisely the same mandate could practically be achieved, consistent with the anti-mandate "commerce clause" argument, by using the taxing power, then does this fact suggest that the anti-mandate argument has the same status as other formalistic federalism arguments (e.g., "the statute is unconstitutional, because you did not put a jurisdictional element in the statute requiring the gun to travel in interstate commerce")? That is, is this argument just more "federalism etiquette" rather than serious federalism?
(C) If the answer is "yes" to (A) and (B), then might one take Pauly's reference to the "angelic pinhead" as a underhanded description not so much of the anti-mandate argument as of those who advance it? Should we lawyers be offended or ashamed?

Posted by Rick Hills on February 4, 2011 at 09:00 AM | Permalink

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Comments

Hi Joe. You said:

"[But] a law that required you to purchase or perhaps even consume broccoli upon pain of incarceration, on the other hand, is such a stealthy infringement on personal liberty or whatnot that we cannot trust that the political process to adequately check it."

It's a stealthy infringement *because* this statue escapes the political consequence that taxes have on politicians, but that fees --when they're collected by insurance companies-- do not.

Posted by: Rena Ambreson | Feb 9, 2011 4:54:30 PM

As I understand his argument, the limitation on the taxing power is a political check: people don't like taxes, so it is much harder to regulate by imposing new taxes, and therefore a formal check like the label actually plays a significant substantive role. That's my understanding of his argument, at least.

Just so I'm clear: Congress's taxing and spending power is virtually limitless, so a proposal, say, to raise everyone's income taxes by 0.2% and then give corresponding tax credits for broccoli purchases would be so wildly unpopular that there is an adequate political check against it.

A law that required you to purchase or perhaps even consume broccoli upon pain of incarceration, on the other hand, is such a stealthy infringement on personal liberty or whatnot that we cannot trust that the political process to adequately check it.

Am I understanding the argument correctly? Because if so, wow.

Posted by: Joe | Feb 5, 2011 1:11:05 AM

And another thing. What constitutes taking enough of a political hit? What if the law said exactly what it does today, but before the vote in either house of Congress the President had barnstormed across the country declaring boldly that the "mandate" is really just a tax? Then everyone would know, ex ante, just how insidious a trick their elected representatives were playing.

Would Barnett concede the law's constitutionality then?

And if so, then what if the President just gave one interview in which he admitted the "mandate" was really just a tax? Then what? If ok then, what if the President said, "Well, some people might think it's a tax, but I prefer not to call it that."

Isn't opening this can of judicial review worms scarier worse for a democratic politics than relying on political opponents to make the case against the policies they oppose?

Posted by: jonah gelbach | Feb 4, 2011 5:48:35 PM

Orin,

You may be right that that's what Barnett thinks. Understanding that you are not necessarily claiming his argument as your own, I want to point out one reason (off the top of my head) why it is problematic.

The argument has to rely on the proposition that somehow people are really easily fooled--if you call something a "mandate" that is in all relevant ways equivalent to a tax, then people who might otherwise oppose the policy will not understand and will fail to pressure their elected reps. Given the rather well publicized--not to mention litigated--outrage over the "mandate" on the right/libertarian/whatever part of our polity, I do not think this claim has much in the way of empirical support.

Furthermore, *lots* of policies are described by their proponents in words that--at best--obscure their actual content. That's part of what politicians do, after all--try to convince people who don't agree with them that what they're doing is actually great. So should we allow constitutional challenges whenever someone thinks the words used are avoiding a "formal check like the label"? And if the answer is no, but only because "mandates" are specifically themselves unconstitutional, then this isn't an argument that really responds to the original point I made. If the answer is yes, then I guess we've just had a revision of the long-made conservative critique of liberal use of the courts--weren't we supposed to get out of court and pass laws? On this argument, it seems that only those liberal laws that are worded in ways that conservatives would like to use to prevent their passage are constitutional.

But anyway, isn't the proper remedy for hiding a policy's true content plain old sunshine? If the policy would be unpopular if the people only understood it, then doesn't the political process work just great by allowing opponents the ability to challenge incumbents in elections? The argument seems less like one that relies on than one that votes no confidence in the democratic process. And that position totally fails to grapple with the substance of key precedents like McCulloch and Gibbons. (I should note that I've followed Orin's posts over at volokh.com, and he seems clearly to agree with me on Judge Vinson's failure to adhere to those precedents; Calinon--I would definitely commend Orin's posting there to you.)

Jonah

Posted by: jonah gelbach | Feb 4, 2011 5:25:15 PM

Well written, Mr. Kerr. I think that's it exactly.

Posted by: Calinon Pervil | Feb 4, 2011 3:28:41 PM

I believe Randy Barnett agrees that if the same law were passed again but explicitly labeled the mandate as a tax, the law would be constitutional. As I understand his argument, the limitation on the taxing power is a political check: people don't like taxes, so it is much harder to regulate by imposing new taxes, and therefore a formal check like the label actually plays a significant substantive role. That's my understanding of his argument, at least.

Posted by: Orin Kerr | Feb 4, 2011 12:42:27 PM

I take this -- "when it was written as a tax" -- as a concession.

Posted by: jonah gelbach | Feb 4, 2011 12:31:50 PM

Rick:
You have a chance at catching up, I think.

A: Yes he's right. ACA would be safer if it was harnessed to Congress's power of tax.

B: No. It doesn't follow that compelling someone to act is the same thing as giving them an incentive to act. (For instance, you had an incentive to attend law school, but you weren't forced to be there. I'll bet you'd have recognized the difference!)

C: Lawyers who think the constitution so easily circumvented by formalistic federalism-arguments aren't looking at the logic of the law, only whether like results. Maybe that's why they assume the individual-mandate is substantively identical to a tax --even though, ad oculos, it's not. So they should be ashamed on the inside, but react in public to the offense. Especially since there's always another post to blog.


Jonah:
Congress didn't accidentally use the wrong set of silly words. In fact they were forced to rely on the individual mandate because they couldn't muster enough votes to fund the law when it was written as a tax.

The provision was an attempt to levy a burden while escaping the consequences from their constituents. Mr. Pauly's insight is only original to people who didn't already know there were limits on legislature beyond what's listed in the constitution. And that these are far more substantial than mere "federalism etiquette."

Posted by: Calinon Pervil | Feb 4, 2011 11:11:28 AM

This is a good point. And also very related to one I made in a comment to Brian Galle's post below (see http://prawfsblawg.blogs.com/prawfsblawg/2011/01/quick-reax-to-the-fl-dc-health-care-ruling.html#comments).

Which I reproduce here:

1. Leaving aside the semantic argument over what's a tax, you've noted in earlier posts (or maybe one of your articles) that the "mandate" when complied with has precisely the same incentive effects as a universal lump-sum tax coupled with a subsidy in the identical amount for those who purchase a qualified health plan.

2. Now let's play the Hudson-Vinson-et-al game. Since the "mandate" has identical effects to a tax-and-subsidy plan, and since the "mandate" would convey breathtakingly broad and therefore unconstitutional powers on Congress, it must be that a tax-and-subsidy plan itself is unconstitutional.

3. Indeed, no doubt there are *lots* of policies that can be re-described in semantic terms that fit the Congress-could-do-anything-if-it-could-do-that line of argument.

4. So, it seems one must live with one of the three following regimes of judicial review:

(a) Policies that are substantively identical to obviously constitutional ones should be upheld as constitutional;

(b) Policies that can be conceived of in a way that as a prima facie matter violates the principle of enumeration-and-thus-limitation are indeed unconstitutional, and therefore substantively identical policies that would otherwise be held obviously constitutional should instead be held unconstitutional;

(c) When Congress is silly enough to use the "wrong" set of words to effect a given policy, a court should hold that policy unconstitutional, even though the same court would hold the same policy constitutional if (a smarter) Congress had used the "right" set of words to effect the exact same policy.

5. Surely it trivializes the whole idea of judicial review to choose either (b) or (c).

Jonah

Posted by: jonah gelbach | Feb 4, 2011 9:39:46 AM

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