Manny Klausner - A Libertarian Life
2012-06-30 · Guest: Manny Klausner (Founder of Reason Enterprises) · 50:35
Supreme Court Decision on the Affordable Care Act
Bob Zadek and guest Manny Klausner discuss the recent Supreme Court decision on the Affordable Care Act and its implications for libertarian legal theory. They explore the historical context of the Commerce Clause and the significance of the Constitution in public discourse.
Topics: Obamacare, NFIB v. Sebelius, Commerce Clause, Libertarianism, Reason Magazine, US Constitution, New Deal, Judge Roger Vinson Speakers: Bob Zadek (Host), Manny Klausner (Guest)
The Libertarian Victory in NFIB v. Sebelius [00:00]
Bob Zadek: This is The Bob Zadek Show. I need somebody—not just anybody. You know, I need someone. Welcome, everyone. Welcome to The Bob Zadek Show. I’m your host, Bob Zadek, every Sunday at noon. Thanks so much for listening. We are the leading libertarian talk radio show in the Bay Area and around the country—the show of ideas, not attitude.
My God, what an interesting time to be immersed in the political process. Thursday of this week, Chief Justice Roberts read from the bench the nicknamed “Obamacare” decision. National Federation of Independent Business v. Sebelius is the formal name of the decision. The media has been all over themselves analyzing and reanalyzing the decision: who won, who lost, and what does this mean for the election?
Well, only a few out there in the media understand who the real winners were. The real winners were—the envelope, please—anyone who is listening to this show and who is a believer in libertarian principles. The only clear winner in that decision were libertarians. Libertarians carried the laboring oar in the litigation throughout the district and circuit courts and were responsible for most of the winning theories in the briefs. So, congratulations out there to all of you. You are all, with me and with my guest, winners in this litigation.
My guest—I’m delighted, I’m honored, I’m pleased to welcome to the show Manny Klausner. Manny is the Zelig of libertarianism. Wherever anything important has happened in the cause of liberty and freedom, and whoever has been involved, there somehow has been Manny Klausner. Manny is one of the founders of the Reason Foundation, which, among other great activities, publishes Reason magazine. He has been active in the Federalist Society, probably since its inception. Manny has worked closely with the David Horowitz Freedom Center. Manny has been active in the Institute for Justice. Manny has worked with Ward Connerly. Who better to join me on the show to do a victory lap for libertarianism on the Sunday after the “Obamacare” decision than Manny? Manny, thanks so much for joining me today.
Manny Klausner: Bob, it’s really a pleasure for me to be on. It’s a great moment for libertarians. I loved your introduction. I appreciate it very much; very kind of you. I think this is a beautiful lead-in to the Fourth of July, which is the ultimate, in my book, the ultimate libertarian holiday. It’s my favorite American holiday. We celebrate the Declaration of Independence—the philosophical belief, unique in America, that the legitimate powers of government are derived from the consent of the governed. That’s something every July 4th I look forward to sharing with our friends. When we gather on the 4th of July, we’re leading up to it with a very fundamental examination by many, many people that never picked up the Constitution before or knew what the Commerce Clause was. A lot of people are tuning in now. What’s the basis for government power over the people?
Bob Zadek: You know, Manny, just before you continue—and I was about to lead into exactly what you’re about to say—the introduction to what you’re about to say is this: I find it goosebump-causing that here we are, 224 years after the ratification of the Constitution, and that founding document is in the news. It is being discussed; it is being analyzed by everyone. I thought back, and as I try to pay attention to world affairs and what’s going on around the world, I have never read where any other country ever had any issue in the public discussion which dealt with their founding document, with their founding principles. And here we are; Americans are discussing the Commerce Clause and “necessary and proper.” It gives me goosebumps to think that Americans, A, care, and B, have to pay attention to that founding document. Sorry, Manny, but it’s astonishing to me.
Manny Klausner: Nothing to be sorry about. I totally agree with what you said. I think this is one of the real—of all the aspects, pluses and minuses, that we can look at in what the Supreme Court did in the Obamacare ruling, which was totally unpredicted by anybody and totally unpredictable because it took turns that nobody could have anticipated—but of all the things that happened, pluses and minuses, one of the beautiful things is that we’re moving to a new paradigm.
Early on in the battle, the new paradigm was that the constitutional limits mean something and that the federal government can’t do anything it chooses. Nancy Pelosi can’t simply say, during the passage, “Is this constitutional to pass Obamacare? What does it do? Well, you wait and read the bill.” She scoffed at the idea there was any constitutional issue.
Last month in Reason, we had one of my favorite covers of all time. We’ve been publishing for nearly 45 years now; it’s the leading libertarian magazine. Reason’s cover last month was a picture of a big head of broccoli, and that symbolized—it became an icon for the argument: “Can the government make you buy this?” We did a cover story last month in Reason, the July issue: “The Libertarian Legal Movement Puts Obamacare on Trial.”
One of the beautiful things in the evolution in the legal history of the Obamacare decision: the very first federal judge that ruled on the issue, “Is Obamacare constitutional?” ruled in the case that was brought by twenty-six attorneys general. That case came up to a federal judge in the Northern District of Florida, Judge Vinson. Judge Vinson ruled on the case, and I commend to anybody listening to this program that wants an instant education in the Commerce Clause up to the eve of this decision to read what Judge Vinson said.
He had the original opinion where he struck down Obamacare. He said it was unconstitutional; the Commerce Clause did not authorize the individual mandate to compel people to buy health insurance. In the course of that, he had an extraordinarily easy-to-understand, very concise history of the Constitution, the Commerce Clause, and the limits on government. It’s really revealing even for anybody; it’s fascinating reading. It’s really an education.
But the federal government, for tactical reasons, balked and didn’t want to comply, and the judge didn’t issue an injunction. The federal government, in order to avoid being held in contempt of court, came back to Judge Vinson and they said, “Judge Vinson, could you interpret and clarify what your ruling means? We’re not really sure what you said.” Then, instead of seventy-eight pages in the original opinion, he boiled it down to about twenty pages. And that is a concise—even more concise—version of the history of the Commerce Clause and what it means, what it meant originally, which is very different. At the founding of the Republic, when the Constitution was originally ratified, the Commerce Clause was only intended to deal with commerce between the states, like regulating barge traffic between the states. It didn’t mean regulating all kinds of business anywhere. It never was intended to do that. That’s the gloss that came over when the Commerce Clause was expanded during the New Deal.
Bob Zadek: Right.
Manny Klausner: And so there was a significant constitutional revolution during the New Deal when FDR had these designs on having massive government intervention in the economy. The Supreme Court said you can’t do it, and there were a series of cases that declared significant elements of FDR’s New Deal to be unconstitutional because they exceeded the powers under the Constitution.
Just to clarify one quick thing: under our system of government—and this is a very fundamental perspective on what makes America unique—it has to be an enumerated power. If the power is not there under the Commerce Clause, under the military clause, under the variety of areas where the government may regulate—if it cannot be reasonably found, a power that the government wants cannot be reasonably found within the Constitution, then it’s either reserved to the states or to the people. This is fundamental, and that’s what the whole battleground is about. If your listeners want to be better informed and get a better sense for the reason and how this came about and how it evolved over the years, that’s where I recommend the original trial court’s opinions.
Manny Klausner: They’re easily available online. If you just go to Google, you can track them down very quickly, and that’s a very short way to do it. So that’s, that’s, that’s going into it. I would say when we look now at the pluses and minuses, I really do feel that the overall victory for us—the biggest, the, the, the most shiny silver in our silver lining that I see here—is that there’s a new discussion about legitimacy, about limits of, uh, federal government. Limits of federal government about individual rights. That’s the discussion. It’s the limits on federal government.
Bob Zadek: Welcome back to the Bob Zadek Show. Every Sunday at noon at News Talk 910, 910 AM on your radio dial. If you still have a dial on your radio—most people do not; it’s all digitized now, but there were at one time radio dials—or www.newstalk910.com if you’re listening on your electronic device. Thanks so much for joining me today. We are the leading libertarian talk radio show in the Bay Area and around the country. 800-345-5639 is the number to have on speed dial to share your views on all things libertarian. I’m talking with Manny Klausner today. Manny is one of the founders of Reason magazine. Manny is a practicing lawyer in Los Angeles, California, and has been active in libertarian issues and has studied under some of the leading libertarian thinkers, including Mises and Milton Friedman, when Manny was just entering the practice of law and studying at law school. Who better to talk about the issues of these days than with Manny? So Manny, thanks again for joining me.
The Constitution and High Blood Pressure [12:15]
Bob Zadek: Now, before the break, I threw out a parallel that none of you could have gotten, where I made reference to the issues of the day having very much in common with high blood pressure. Here’s what I mean. The Constitution seems to be in the news all of the time. We had a constitutional discussion on the Citizens United case a while back, of course. Before that, Roe v. Wade. Now the Constitution was very much in the news in discussing the Obamacare decision. So, what does that tell us? Why, why are we having so much of a public discussion on the Constitution? And I think the lesson is this: when you have normal blood pressure, you don’t check your blood pressure every day. You just assume that it’s fine and you go about your life. Then the doc diagnoses you with high blood pressure or low blood pressure, and all of a sudden, that becomes an issue in your life. And you, to be healthy, you will check your blood pressure once or twice a day, every day. Something which you took for granted and didn’t bother with when everything was medically normal in your life becomes an issue that you have to check regularly because it is now medically abnormal.
Well, what’s happening and what’s happened in Washington is we have a federal government that is abnormal in a constitutional sense. The federal government has been constantly pushing the limits of governmental power; they are getting into the red zone, and they are not behaving the way they were supposed to behave, but rather they are, they are in this process. And by the way, this doesn’t seem to matter whether the Democrats or the Republicans are in power, but Washington as an institution is constantly pressing the limits. It’s at the outer edge of what they should be doing. And as those folks in Washington constantly seek to accumulate more and more and more power, we have to look to—we being libertarians and everyday Americans who are not politically affiliated—find themselves wondering: how do we check? How do we pay attention? What are the limits that we can use to stop this accumulation of power? So we are required to dust off the Constitution as a reaction to the accumulation of power. If Washington had not been on this tear of accumulating more and more power, none of us would have a need to look for the limits on that power. And this, the movement of constitutional principles into everyday conversation, is a reaction to Washington’s accumulation in power, just as the founders predicted. So Manny, I think that’s why we are all of a sudden walking around with the Cato version of the Constitution in pocket-sized form in our back pockets: because we need it because of the behavior of Washington.
Manny Klausner: Absolutely. Defeated McCain. McCain was clearly a third-rate candidate who hardly believed in limited government. And in many ways, he was far worse than Obama as far as his issues that he was supporting: cap and trade; he wanted individual mandates. There were a lot of bad things there. It would have been terrible if he got elected. But in, in many ways—in many ways worse than Obama, because McCain would probably have imposed cap and trade by getting the Republicans who were against Obama’s program. McCain could have gotten them to go along for the ride, as most big government Republicans do when they’re governors of states or elected as president. So it’s the—divided government makes sense if the Republicans are big government Republicans. And I vote Libertarian consistently for president because I live in California and it really would make no difference if I had a thousand votes or a million votes; I couldn’t change the outcome in California. But I do think this is one of these close elections that is so stark. Obama has come to office with a very extreme radical position, and I don’t want to turn this from a discussion of Obamacare so much to Obama, other than to say the stakes are extremely high in November, and what the Obamacare decision has done is made those stakes even greater because what the Chief Justice did—Chief Justice Roberts in his opinion—is really turned by making this very strained argument that the Obamacare is a tax, contrary to what the Congress said, the Democrats, contrary to what Obama was insisting. The judge said it’s a tax and therefore it’s constitutional, because it clearly was not constitutional under the Commerce Clause. The last point I just made about the Commerce Clause is really a very, very significant turn of the—
The Commerce Clause and the New Deal [18:30]
Bob Zadek: Now I’d like to, I’d like to explain just in a few seconds. We’re using phrases like the Commerce Clause, the taxing power, and another phrase that’s used a lot is “necessary and proper.” And just so the audience has a frame of reference, as Manny said before the break, the Commerce Clause—the Constitution was created, the main purpose of the Constitution, believe it or not, was to limit the federal government’s power. It was drafted as a limiting document, and it said to the federal government—because the states and the people were deathly afraid of this movement of power to Washington. So the founders were committed to this federalism system of dual government, Washington and the states, and the federal government had only very specific powers.
Now, when the states were independent colonies, there was jealousy, and the states were taxing each other’s products and interfering with commerce. In order to be a strong national economy, the Commerce Clause was drafted to allow the federal government to prevent states from having commercial wars against each other, because that would be bad for the country. So commerce—so the federal government was given the power to regulate commerce between the states. That was designed to be, to allow the federal government to make the interstate issues go away. It was not designed to give the federal government power as against the people, but the—that was hijacked during the New Deal as the basis by which a lot of the New Deal programs were found to be constitutional. So the Commerce Clause got hijacked and became the tool of—the tool of, the weapon of choice. When Congress wanted to regulate any kind of activity, they just found it to be commercial in nature and they could regulate it, and there were some pretty, um, pretty strong decisions and adverse decisions to libertarian principles. So that’s the Commerce Clause.
The Commerce Clause and Wickard v. Filburn [21:46]
Manny Klausner: On the other hand, I might—but Bob, let me just briefly interrupt to say that one of the cases when I was in law school at NYU, I learned the Commerce Clause, for all practical matters, doesn’t mean very much as a limitation on federal power. And that was because of a case that upheld one of the Roosevelt New Deal statutes: Wickard v. Filburn. A farmer who wanted to grow wheat—his own wheat on his farm for his own subsistence for the family without selling it. And the federal government had passed in 1938, under FDR, the Agricultural Adjustment Act, which basically said, “We want to stabilize the fluctuations of the market price for wheat.” And the court then found even if one farmer grows food for himself, that doesn’t make much difference, of course, but if all farmers or many farmers decided to grow wheat for themselves, it would change the market price for wheat. And therefore, the Commerce Clause allowed the government to tell this farmer, “You can’t grow wheat for your own family.”
That’s pretty extreme, and that’s the way—and this is what’s so significant now about the ruling in Obamacare. That’s the way it’s been since 1942, with narrow exceptions. There were a couple of major exceptions that most people on the left did not really understand fully. There were two cases, one in 1995—the Lopez case—and then followed shortly thereafter by another case that ruled on the scope of the Commerce Clause. And when they were dealing with non-economic activity, the court basically backed down; they retreated from this extreme, unlimited holding in Wickard, and they basically said that there were limits. And that was the Lopez case in 1995, and five years later, the Morrison case involving the Violence Against Women Act.
And basically, the court said, “You know, you just can’t go this far.” And that was the early seeds that were planted for what became the victory strategy and analysis that led to what we were able to achieve in the Obamacare case. And the important part of the—without getting too much into the legalities—the great gift that Justice Roberts gave to us libertarians is Roberts, in very strong language, affirmed that there are profound limits to the use of the Commerce Clause in regulating individual behavior. And that will be the legacy of this decision. And he has taken the wind out of—I’m sorry to mix metaphors, but he has taken the weapon of choice away from the liberals by denying them the misuse of the Commerce Clause.
Bob Zadek: I’m talking with Manny Klausner. We are discussing the Obamacare decision, what it means to libertarians, and along the way, we are revisiting some core principles in the Constitution, our founding document.
Economic Liberty and the Constitution [24:30]
Bob Zadek: I’m joined today by Manny Klausner. Manny has been involved in libertarian issues since law school and perhaps before. Manny had the privilege of spending some time with Milton Friedman when Manny was studying in Chicago and with Mises when Manny was studying at NYU in New York City. Manny has been involved in the Federalist Society since its inception. He is a founder of Reason Enterprises, which publishes Reason magazine—the leading libertarian publication in America. I wouldn’t dream of missing an issue. Reason does great work, and it’s a must-read for you folks. Reason issues a daily update, free; getting it in your email in the morning is more than fun. I strongly recommend it to all of you.
We are talking about the Obamacare decision and more, and what it means to us libertarians. And it is so interesting to me, and I know to Manny as well, that the subject of a 234-year-old document, the U.S. Constitution, is still of vital interest to all Americans. And it has pocketbook implications. It has strong issues of personal freedom. And you have to—as Pericles said, “Just because you don’t pay attention to politics doesn’t mean politics will not pay attention to you.” So you have to become informed. You would prefer—you out there, ordinary Americans who just want to live your life and be free—you are dragged into the process because we have a federal government who is, while you are sleeping, plotting and finding ways and looking for technical ways to elbow into your life and take away the freedoms that our founders have promised to us. And it’s only if we remain diligent and cut them off at the pass can we preserve our liberties.
So we have no choice. We must become knowledgeable in these issues, and we must understand the position of those who would seek our vote and how they stand on matters of personal freedom. And what’s so interesting is, and what’s really important in the Justice Roberts decision for libertarians is… Manny has fought all his life, as have most other libertarians, for matters of economic liberty: the right to earn a living, the right to contract with another willing adult to enter into a bargain to sell goods and services. Economic liberty is the cornerstone of libertarian doctrine.
Manny Klausner: The right to—let me just amend that a little bit, because libertarians view economic liberty as indistinguishable in importance from civil liberties and personal liberties. And for libertarians, the word “libertarian” comes from “liberty.” What it means basically is a libertarian believes that liberty is the most important political value. And that does, of course, include economic liberties, which is very unpopular in the Bay Area among many people on the left, many Democrats.
But the idea that a person can set up a business and go into compete without having to get a license—you know, usually these licensure laws are supported by competitors—the idea that you can practice economic liberty is very unique in America. It’s being undermined. And what the Obamacare decision does is resurrect the primacy of limited government and gets people to read the text, and especially the way Justice—Chief Justice—you wish it was… my favorite justice on the bench is Clarence Thomas. And I would tell you, the cases I mentioned before the break, where the U.S. Supreme Court started in the last fifteen, last twelve years to go back to the pre-New Deal interpretation of the Commerce Clause, Clarence Thomas has really been the most consistent. He was alone in the beginning, and the other justices have joined him.
And there was a case, by the way—here’s an issue for libertarians, so it’s not just an economic liberty case, it’s more than that. The Raich case involved a woman in the Bay Area who had a severe medical problem, and the only medicine that really worked for her was medical cannabis or medical marijuana. And the issue in that case was under the George W. Bush administration. John Ashcroft, the attorney general—and by the way, I wasn’t just a student at Chicago, Bob, I was actually teaching there. I was a member of the faculty, and one of my students was John Ashcroft. And I didn’t really teach him constitutional law or issues of federalism and limited government.
But what Ashcroft did, which was just horrendous, was lead the charge against the California medical marijuana dispensaries, even though the state of California had passed Prop 215, which authorized it under state law. Now, Obama came to office saying that he was going to do the opposite. Of course, he’s been far worse, and the press has been very kind in shielding that. But there’s more: people in the Bay Area know that Obama has been much more vigorous about stamping out the dispensaries than even George W. Bush, as shameful as that was.
But let me mention, Clarence Thomas had a beautiful dissenting opinion in the Gonzales case, which was the case where Angel Raich—that was her name—she used marijuana and the federal government was trying to dry up her supply. And she lost the case; it was a divided court.
The Commerce Clause and the Obamacare Decision [32:08]
Manny Klausner: But Clarence Thomas said in his dissent that if Congress can regulate this—the idea that a medical patient can’t use marijuana that was never bought or sold, basically she was getting it either growing it or getting it by barter—she wasn’t really, uh, uh, it wasn’t, she was not engaged in commerce. And Justice Thomas said if Congress can regulate this under the Commerce Clause, then it can regulate virtually anything. And the federal government is no longer one of limited and enumerated powers.
And I think a lot of people listening to this, uh, program would share your view, Bob, and mine, that this is no business of the government in a free society. And so if liberty means anything, it means that people can do as they choose in any consensual voluntary transaction if they’re not using force or fraud against somebody else. And we’re talking about adults; we’re not talking about, uh, children who don’t have a capacity, uh, in this to contract, as we know.
Uh, so the, the, uh, Clarence Thomas is the boldest, the most consistent. What we see in the medical marijuana—I’m sorry, now in the Obamacare decision—is that Clarence Thomas was almost unique in US Supreme Court history. There was a dissent signed by four justices. Not, it wasn’t that one judge wrote it and three others joined. Four justices: Thomas, uh, the, uh, uh, Alito—it was Alito, it was Kennedy, yeah, Kennedy and Scalia. They all joined the opinion, and it’s very powerfully written. And it, there’s some talk that maybe, uh, originally the, the, the Chief Justice was gonna join it, and then after the conference when they voted, uh, he switched sides. It’s hard to know exactly what happened.
But many people are very critical of Chief Justice Roberts for go—even though he went with our view of the limitations of the Commerce Clause. And we, we, this is one of the real silver linings in the case. Some people are very critical and say silver lining doesn’t mean anything because he allows Obamacare to stay in force, even though he made some modifications under the theory that it’s a tax. It was a very strained argument. Nobody called it a tax in any serious way, and the President and Congress denied it was a tax. And I saw this morning on the Fox Sunday show, uh, the interview show, the, uh, policy advisor for the, uh, the, uh, White House is saying it’s not a tax, even after the decision. That was Lew.
Bob Zadek: Yeah.
Manny Klausner: So, so the, the point is this is politically a terrible thing for the left, and it really puts a lot of limitations. You know, the, the, the, th—there’s been a lot of critique of what, whether what the Chief Justice did was really legitimate and proper, and I feel it was really a strange and unfortunate thing to do. On the one hand. On the other hand, hi—his having d—done that probably has some major positive effects. One, the left always has wanted, uh, the use so-called universal medical, uh, universal Medicare or a single-payer system. And that’s probably off the table right now. Um, and I think that that is good news.
The other good news is it makes the people on the left either continue to be dishonest and now even more glaringly so if they say Obamacare is not a tax. Of course it is. They’re actually, uh, uh, uh, Chief Justice Roberts talked about the tax that, uh, uh, if you don’t get medical insurance under the mandate under Obamacare, then you have to pay a penalty—or now, if the Chief Justice said it’s a tax, because he upheld it as a tax. If it wasn’t considered a tax, it would have all gone down.
So the left is really in a quandary and it’s kind of a Pyrrhic victory for them in a way, meaning that we m—we may well, uh, lose the battle and win the war about limiting and rolling back the government and meanwhile it’s gonna be the hottest issue on the plate for the November elections. Now Mitt Romney is not going to win California for sure. So people in the Bay Area don’t have a lot of, of, uh, decisive impact on the election. But every—I know you have national, national audience, Bob, and I think that this is the moment where it’s rare for me to say vote for a Republican when the—there’s a libertarian available unless they’re really a limited-government Republican. And, uh, Mitt Romney doesn’t, uh, come totally with pristine, uh, credentials in that regard because he authored and supported Romneycare, uh, and still and, and he does, doesn’t totally, uh, condemn it and say he wouldn’t do it if he had a chance again.
But I would say that it’s choice in November’s pivotal. And we’re, I think, we’re at a crossroads in America with this election, and this is all made much clearer, the turning, the alternatives: whether we want a government that can force us to do anything, or we believe in a regime of liberty. And I would also say there’s a tax consequence that most people don’t know. They’re gonna be finding more about it. There have been a lot, uh, several articles recently that have come out in the last couple of days spelling out there’s some twenty-one different taxes in Obamacare, and these are taxes primarily that fall on the middle class. They also are gonna fall on the number of the uninsured.
So this is, uh, kind of a bitter pill for people that were rooting for Obamacare without really knowing what was in it. Once they realize the implications, it’s not a free ride. They’re gonna be paying for it, and this is a time when the economy is, is, uh, slowing down. Yet again, this is the, the, uh, good products of Obama’s, uh, approach to use big government to regulate everything and refuse to take off government restrictions on business and refuse to lower taxes across the board.
Bob Zadek: On the issue of taxes, we’re gonna discuss the very, very interesting constitutional issues involving tax versus penalty, and we’ll hear from Robert in San Jose, who has a point of view to share with many and with myself. This is Bob Zadek. We’re parsing the Obamacare decision from a libertarian point of view. We’ll be back in ninety real short seconds.
The Power to Tax and the 16th Amendment [38:15]
Bob Zadek: Welcome back to the Bob Zadek Show. My guest today is Manny Klausner. Manny is one of the founders of the Reason Foundation, which publishes Reason magazine. Manny has been active in libertarian causes his entire life. Thanks so much for joining me, Manny.
Now, before the break, we were talking about the tax implications of Obamacare. And to me, I—it’s always most important to learn and to understand and to start with the Constitution. What is that? Why is the Constitution relevant? Well, once again, on federal powers, uh, Congress, as one of the powers, the enumerated powers that Manny referred to, uh, the federal government is given the right to lay and collect certain taxes. Not all taxes, and not just tax, but certain taxes. That did not include the income tax. The income tax had to be added, as we know, uh, in the dark days of 1913 by the 16th Amendment to the Constitution, which changed the Constitution and gave Congress the right to lay and collect an income tax.
Now, the, the power to tax, while not unlimited, is very broad. And Congress can tax, uh, virtually for any reason. Um, even to affect behavior. The Supreme Court will not look behind the motives and just—it’s very broad, but it’s not unlimited. So the reason it was so important for Congress to find, or for, for Justice Roberts to find that, uh, the penalty was a tax—the reason for it is Congress’s power to tax is very broad. Congress’s power to assess penalties is not broad. It’s only if it’s incident to another enumerated power. And Roberts found they didn’t have the power to force you to buy insurance, therefore the penalty couldn’t be to enforce a power because the power wasn’t there, so it had to be the power to tax. And so that’s how Roberts decided.
And, uh, on the issue of taxation, Manny, we have a caller from San Jose. That, as you know, Manny, is between us, is between Northern and Southern California. Robert, welcome to the show. And what’s your issue this morning?
Caller: Robert from San Jose [43:20]
Robert: Good morning. I’m glad I discovered your program. Never knew, never knew it was here.
Bob Zadek: We’re here laboring away, Robert. Thanks so much for listening.
Robert: Um, I’m, uh, uh, if I could do two, two aspects here. If, uh, if you think that the average voter, the common people are going to get these distinctions that you’re talking about. I don’t know how. Here we are just a couple of days later. I’m looking at the San Jose Mercury News and, uh, and the headlines on the paper are about probates and about one gigabit and about, uh, helium shortages and deflating the parade and—yeah, they don’t discuss this stuff with the—
Bob Zadek: Well, that’s next Sunday. Next Sunday I’ll do a show on Libertarians and Helium. Okay.
Robert: Yeah, it’s the Mercury News directed at the feet of the New York Times here and the AP. Um, okay, so these taxes…
Bob Zadek: Now I heard—oh God, who’s the afternoon guy? Words come slow. Talking about the different types of taxes, and I went to open my Constitution book and I see that there’s this direct taxation that apparently sounds like a capitation tax—so much tax, a tax on each head. There’s excise taxes, which as I understand it is a tax on activity.
Manny Klausner: Yeah, on activity. On doing, performing a certain usually economic activity like importing goods, for example.
Bob Zadek: Service or goods, and then import and export duties. Duties are imposts, and I’m not sure what imposts are. But I want to know, bottom line, if the object of this whole thing between the Supremes and the administration is to make sure that there’s insurance coverage so that insurance rates don’t go skyrocketing, then what are they going to do with these penalty taxes? Where’s that money going to go? It comes to the IRS and they’re going to distribute it to the insurance companies so that the insurance rates can stay down?
Manny Klausner: No, because the purpose of the tax is not to raise revenue. That’s the rub. That’s why it’s really not a tax. In fact, it’s the Obama administration’s hope they never collect one penny in taxes. They want the tax there to persuade you to buy the insurance. This is a taxing revenue where they hope they don’t collect a dime. That’s their goal.
Bob Zadek: Yes. But what are they going to do with those taxes? Because they are going to collect—
The Individual Mandate and the IRS [42:18]
Manny Klausner: I assume they’ll go to the federal treasury, but the cost of collecting them is vast because, as you know, Obamacare, which purported to provide the opportunity to have health insurance for some thirty million—the number varied, but say some thirty million uninsured Americans—there was no provision at all to increase the supply of doctors. So we know there’s going to be a healthcare crisis just when you have more patients and the same number of doctors.
But this other side of the coin is while there was no provision to increase the number of doctors under Obamacare, there was a provision to hire massive thousands of new IRS agents at the cost of billions of dollars. So there’s a massive expansion of the IRS. And one thing—the Mercury News will soon get into it, but the beautiful thing about living as an American today is that you don’t need to have the newspapers say what you want to talk about. All you need to do is go to the internet.
And the Wall Street Journal, by the way, is just an excellent daily source. Their op-ed page is just superb. But if you go to the site Reason.com or Instapundit—this is another site I like, it’s a libertarian law professor, Glenn Reynolds at the University of Tennessee Law School, very smart guy. A very quick way of getting up to date is the Volokh report. It’s V-O-L-O-K-H, named after Eugene Volokh and his brother Sasha Volokh. They’re both law professors, very, very intelligent libertarians. And the Volokh report has a handful, like a half a dozen or eight different libertarians and conservatives that write regularly and others on issues of the day, and they’ve had a tremendous—it’s just a tremendous source of good analysis of the Obamacare arguments and the decision.
So there’s a lot of—you know, so you don’t need—and now I understand the print media is dying. Some people only look at newspapers these days or the network news, but it’s easy these days to get informed if you’re interested. And I think come November there’s going to be a lot of commercials and a lot more understanding of what the alternatives really mean.
Legal Analysis and the Roberts Decision [47:15]
Manny Klausner: So I would say on the tax aspects, maybe people aren’t totally focusing on the details, but I think they have the big picture. And I think in that regard, there’s more consternation in a sense on our side, meaning libertarians and conservatives, because some people are—well, let’s put it this way. Anybody that took the issues in Obamacare in the case seriously is gravely disappointed at what Justice Roberts did.
What he did was made up an argument basically out of whole cloth. There was a total reach that was totally unprecedented to call what the Obama administration called a penalty if you didn’t buy the medical insurance—the healthcare insurance—to call that a tax. Nobody took that seriously for a minute, and certainly not the government.
But the good news for libertarians is now, while Roberts has given those folks who want to control us a bit of a roadmap—he has said, “Use the taxing power”—the taxing power is politically toxic. So now it was very easy for those who would seek to control us to hide behind the obscurities of the Commerce Clause. When they have to call it a tax, that’s politically unpleasant to them. And that in and of itself—the genius of the Roberts decision is he throws it back into the political process, and he says, “Washington, if you want to seize power, call it a tax and take the hit at the ballot box if you have the guts.”
Take a look at Reason.com today. Nick Gillespie has a short piece, and he basically makes a comment on a piece in today’s Washington Examiner, which is just wonderful, by Glenn Reynolds, the law professor at Kentucky. And basically the caption of Nick Gillespie’s post today is “Instapundit: Forget the Supreme Court’s legitimacy. What about Congress and the President?” And this is Glenn Reynolds’ ingenious response now to the people, the libertarians and conservatives who are saying what a terrible thing, how illegitimate it was for Roberts to do what he did. And it was really strange.
But don’t focus on that. Focus on Congress and the President. Look what they tried to pull off. This was a total outrage. And I think people are going to get that message. So I commend you to both go to Instapundit.com or Reason.com today. You’ll see a reference to that piece by Glenn Reynolds in today’s Washington Examiner. Must reading.
So those of you who are despairing out there for the Obamacare decision—forget about the issues on the statute itself. The statute itself, I believe, will be dealt with through the political process. And if the public truly despises Obamacare, they know how to vote. So Obamacare is merely the battle du jour on the major issue, which is libertarian principles. And for the major issue, putting aside the minor issue, we were the big winners. And what’s most important is it was libertarian lawyers who carried the banner, who did all the laboring work, and publications such as Reason and many others who save liberty for us all.
Bob Zadek: This is Bob Zadek. I’ve had a wonderful hour with Manny Klausner. Manny is one of the founders of Reason magazine. We are discussing the Obamacare decision from a libertarian perspective. We have regretfully run out of time, but don’t despair.