LAS VEGAS — The last time Obamacare was challenged before the U.S. Supreme Court, it barely survived.
Only because Chief Justice John Roberts creatively re-construed the law’s unconstitutional penalties as constitutional “taxes” was a 5-to-4 Court majority able to form and save the gargantuan law, officially known as the Patient Protection and Affordable Care Act of 2010 (PPACA).
Even then, a key provision of the law — denying states federal Medicaid subsidies if they did not agree to expand that program — still went down, substantially complicating prospects for PPACA’s success.
Now another significant legal challenge is bearing down upon the law, and right at the heart of that court case are decisions made four years ago by U.S. Senate Majority Leader Harry Reid.
Article I, Section 7, clause 1 of the U.S. Constitution provides that “All Bills for raising Revenue shall originate in the House of Representatives.”
However, PPACA was cobbled together by Sen. Reid and others from three different bills, all of which originated within the Senate, not the House. And the Obamacare bill most definitely raised revenue.
According to the Congressional Budget Office, the law is projected to raise an estimated $813 billion in revenue over 10 years. According to Marc Goldwein, senior policy director at the bipartisan Washington, D.C.-based Committee for a Responsible Federal Budget, the haul of taxes over that period may be as high as $1 trillion.
There’s a good reason that the Constitution requires that federal revenue-raising measures must originate in the House of Representatives, says Timothy Sandefur, principal attorney at the Pacific Legal Foundation, which has sued the Obama administration in federal court.
“The founding fathers viewed the Origination Clause as a critical protection against government abuses,” he notes, adding “they were also mindful of the abuses of the taxing power” that England had seen under the Stuart monarchy.
For that reason, writes Sandefur in a recent law review article, “the Constitution’s authors chose to keep the taxing power as close to the voters as possible — with the House of Representatives, which is elected every two years directly by people in local districts, instead of the Senate, members of which serve alternating six-year terms, and were not initially chosen by voters at all, but by state legislatures.”
He notes that during the debates over the proposed Constitution’s adoption, an opponent, the Anti-Federalist “Brutus,” had 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!”
In response, the Constitution’s supporters — including Alexander Hamilton and James Madison — had answered that this risk was minimal because of where the taxing power had been placed.
The “principal reason” why the House was given the power “of originating money bills,” said Madison, was that the representatives “were chosen by the people, and supposed to be the best acquainted with their interest and ability.”
The founder who may have made the point best, says Sandefur, was George Mason. Calling the Senate “[a]n aristocratic body,” which “should ever be suspected of an encroaching tendency,” Mason believed “[t]he purse strings should never be put into its hands.”
The Pacific Legal Foundation has sued the federal government in behalf of a client, Matt Sissel, who after serving for eight years in the Iowa National Guard, including two years as a combat medic in Iraq, is starting a new career as a professional artist.
Sissel has chosen not to buy health insurance because he wants to be free to invest in his own business instead, and the costly insurance premiums aren’t worth the money to him. According to a media fact sheet released by the foundation, Sissel wants the freedom and flexibility to do his own budgeting, including setting aside money for his medical needs as he chooses, without government oversight.
“As a small business owner,” Sissel says, “I don’t need the government telling me how to manage my expenses; they can’t even manage their own.”
Where the PPACA legislation actually came from is made clear in the official daily record of House and Senate doings:
According to the Congressional Record for Oct. 8, 2009, among three new bills being read for the first time that day was H.R. 3590, a bill referred from the House of Representatives “to amend the Internal Revenue Code of 1986 to modify the first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees, and for other purposes.” The original text of the bill is still available online.
The actual name of the bill was “The Service Members Home Ownership Tax,” and two days before, Congressman Al Green, of Texas, had described it as amending “the federal tax code to provide an exemption for members of the military, CIA, and Department of State that would not require them to repay the homebuyer tax credit if they are called for overseas duty and are forced to sell their homes within three years of purchasing…”
However, on Nov. 19, Sen. Reid introduced an amendment to simply gut the entire content of the war-veterans home-ownership bill, and replace it with the draft content for Obamacare, which he and other members of the Senate’s Democratic leadership had cobbled together — behind closed doors, according to statements by Republican Sen. Charles Grassley, of Iowa, on the Senate floor.
The language of the amendment is significant for the Pacific Legal Foundation’s lawsuit:
SA 2786. Mr. REID (for himself, Mr. BAUCUS, Mr. DODD, and Mr. HARKIN) submitted an amendment intended to be proposed by him to the bill H.R. 3590, to amend the Internal Revenue Code of 1986 to modify the first-time homebuyers credit in the case of members of the Armed Forces and certain other Federal employees, and for other purposes; which was ordered to lie on the table; as follows: Strike all after the enacting clause and insert the following … (Emphasis added.)
The original veterans bill was only six pages long. Reid’s amendment took up the next 209 pages of the Congressional Record for that day. Included among the amendment’s provisions were the infamous Individual Mandate and 17 other separate revenue-raising provisions. According to a letter sent Reid by the Congressional Budget Office, the draft form of PPACA was estimated to increase federal revenue by $486 billion by 2019.
Sandefur acknowledges that “this ‘strike and replace’ procedure — sometimes called ‘gut and amend’ — is not uncommon,” especially in state legislatures. However, he notes, the U.S. Supreme Court “has never determined whether Congress can use the trick to get around the Origination Clause’s mandate.”
Most previous cases that have come before the Court that involved the Origination Clause, he writes, have involved taxes that were generated in the Senate as amendments to revenue-raising bills that had come out of the House. However, the veterans bill, H.R. 3590, did not raise revenue.
Sandefur also argues that “these cases did not give the Senate carte blanche to rewrite House-passed bills to make them into revenue-raising bills. Instead, the Court held that Senate amendments must be ‘germane’ to the subject of the original House bill, which must in the first instance be a bill for raising revenue, before the Senate amendment can qualify as a constitutionally authorized amendment.”
His article continues:
This germaneness requirement ensures that the Senate does not try to use its power to amend as a means of evading the Origination Clause. No court has ever held that the Senate can use the gut-and-amend procedure to create from scratch a bill for raising revenue.
On the contrary, courts have consistently held that the Senate must respect the Origination Clause: that “all legislation relating to taxes (and not just bills raising taxes) must be initiated in the House,” although “once a revenue bill has been initiated in the House, the Senate is fully empowered to propose amendments, even if their effect will be to transform a proposal lowering taxes into one raising taxes,” and that “courts will strike down a law when Congress has passed it in violation of such a command.”
The Pacific Legal Foundation lawsuit was originally filed against the federal Department of Health and Human Services in 2010, arguing that PPACA’s Individual Mandate, as defined by its enabling legislation as a penalty, was unconstitutional.
After the U.S. Supreme Court in June 2012 agreed, but recharacterized the Individual Mandate provision of Obamacare as not a penalty but a tax, the Sissel/PLF complaint was amended to challenge PPACA on the grounds that its Individual Mandate “tax” did not, as required by the Constitution, originate in the House of Representatives.
Attorneys for the Obama administration have asked the District of Columbia District Court, where the case is being heard, to dismiss it. The foundation filed its opposition-to-dismiss brief in January and is currently waiting for the court to rule.
If the court grants the government’s motion for dismissal, Sandefur told Nevada Journal, it will appeal to the D.C. Circuit court.
Steven Miller is the managing editor of Nevada Journal, a publication of the Nevada Policy Research Institute. For more in-depth reporting, visit https://nevadajournal.com/ and http://npri.org/.