Freedom Line Blog

At the risk of being accused of celebrating a bad deal rather than merely arguing that it wasn’t as bad as some conservatives say(I am doing the latter, not the former), I hereby jump into the fray again to request a little logical consistency from fellow conservatives.

Imagine a scenario the direct converse of what just occurred this week.

Imagine that years ago Congress had passed a “temporary” tax hike to pay for a war and its aftermath. Imagine that the hike was scheduled to expire at 12:01 a.m. on a certain New Year’s Day. In other words, by law, taxes would drop on every American on Jan. 1 if Congress didn’t act.

Now, what if Congress suddenly decided it couldn’t “afford” to “lose” those revenues. So it began working to block the expiration of those higher rates.

Regardless of whether Congress acted on Dec. 30 (before the expiration of the higher rates) or on Jan. 1 or 2 (after the expiration), there is not a conservative on Earth who would argue that Congress was doing anything other than raising taxes if Congress indeed intervened. And if Congress had intervened to block the scheduled rate reduction for 99% of Americans, while allowing the lower rates to apply to 1%, there is not a conservative alive who would be celebrating the reprieve for the 1% rather than denouncing Congress for keeping the current rates for the 99%.

In that scenario, every conservative would treat the already-scheduled-by-law rate reduction as the baseline, and any change in that schedule as the intervention.

So why, if the situation is reversed, do conservatives yell that Congress “raised” taxes by acting to avert a scheduled tax hike for 99% of Americans? Why is it that the already-scheduled-by-law rate increase is treated as if it is the intervention, while the change in that schedule, in order to save lower rates for 99%, is treated as the baseline?

…….

The point is that consistency should be required. Deciding whether something is a tax “hike” or a tax “cut” should not be a changeable proposition depending on the political circumstances. Either the law as written is the baseline, or it isn’t. You can’t say that in one case the law as written is the baseline, while in another case the existing rate structure is the baseline no matter what the law says is supposed to happen to that baseline.

Conservatives have every reason to grumble that President Obama refused to act to protect the final 1% (or whatever the exact number is) of Americans from higher taxes. But it is just not fair to blame Republican leaders for failing to act when they indeed already had acted months ago but the Senate and president refused to go along. Yes, yes, there were all sorts of different strategies and tactics that might have achieved better results (from a conservative standpoint) than were actually achieved, but that doesn’t mean that congressional Republicans are guilty of hiking taxes when they strove so mightily (even if ineffectually) to avoid raising even a single dollar of taxes.

The law as written is a mighty powerful instrument. President Obama had the law as written on his side, combined with the media, combined with the polls, combined with the political momentum of a very large electoral victory. For Republican leaders to fail to overcome the law, the media, the polls, and the political momentum might represent a lack of skill, but it is hardly a betrayal of principle. All that is at issue are small degrees of difference as to what was achievable as the best, or least bad, outcome from a very difficult situation. When a party controls only one half of one of the two “political” branches of government, and when the party controlling one-and-a half out of two (including the most powerful one) also has existing law (requiring higher rates as of Jan. 1) on its side, then the first party does not have one heck of a lot of leverage.

Do I think anybody else could have achieved a better outcome than John Boehner achieved? Yes, slightly. But was the final outcome an utter catastrophe, compared to what would have happened if nobody acted at all? Not in the least, as I have explained in other blog posts and columns. And there is something to be said for Boehner’s dogged attempts to avert catastrophe, and certainly something to be said for a result that saved married couples from higher tax rates for another $200,000 in earnings while for the first time inflation-indexing a very large exemption from the death tax.

———————

By contrast, moving forward, the leverage is almost all in favor of conservative goals. Whereas in this week’s deal the alternative of failing to act would have meant a horrible outcome (tax-rate hikes for 100% of Americans), there now remains not a clause in current law that will force any more taxes to rise if Congress fails to act. But if Congress fails to act at all — if it does nothing — then conservative wishes for lower spending will indeed occur. On both taxes and spending, the leverage of doing nothing — and thus of allowing the law as written to proceed — is now in conservative hands.

What remains is for Republicans and conservatives to revamp their strategy, tactics and communications, so they come out better in political terms than they emerged from this fight. The first step needs to be to stop cannibalizing our own side and instead aim fire at the leftist president — and to start by focusing attention on the unpopular$1 trillion in taxes that just went into effect from the unpopular next phase of implementation of the unpopular ObamaCare law.

It’s time to stop bemoaning the past, and to start working to improve the next battles that will be upon us in very, very short order.

Following up on Quin’s analysis, the Washington Times sheds light on another silver lining in yesterday’s fiscal cliff – formal repeal of Obamacare’s CLASS Act.  The Community Living Assistance Services and Supports Act is a giant unfunded mandate benefiting the long-term functionally disabled.  I say formally repealed yesterday because the Obama Administration already abandoned the CLASS Act in October of 2011 because it was unaffordable, and therefore unsustainable.

Sounds like logic that should inform the next round of fiscal negotiations…

As readers here are probably aware from all the prior pieces I’ve written on this topic, I believe one of the worst items in ObamaCare is the medical device tax, and I believe one of the worst pieces of political malpractice committed by the Romney team was the failure to campaign against it. Well, here’s more proof  of just how potent a political issue it should have been and of how awful a tax it is: Sixteen Democratic U.S. Senators and two Senators elect have written to Harry Reid asking that the device tax be “delayed.” (Quoting from a piece by Byron York) :

“[The senators wrote that] The medical technology industry directly employs over 400,000 people in the United States and is responsible for a total of two million skilled manufacturing jobs,” the senators wrote in a December 4 letter to Reid.  “We must do all we can to ensure that our country maintains its global leadership position in the medical technology industry and keeps good jobs here at home.”

Beyond that, the senators say, the medical device industry “has received little guidance about how to comply with the tax” — a reference to the apparently confused and halting nature of the Obama administration’s implementation of Obamacare.

Several of them have gone further, calling for full repeal of the tax. This should be an easy issue. It should be part of a stand-alone bill, not part of Fiscal Cliff negotiations. It enjoys a veto-proof majority. It’s time to kill this bad policy before it takes effect — or, at least, such seems to be the reasonable sentiment behind this letter from these oft-unreasonable senators.

In an interview with CFIF, Sally Pipes, President of Pacific Research Institute, discusses the fate of ObamaCare, Medicare and health care, generally, in the aftermath of the elections.

Listen to the interview here.

Human Events kindly provides the full text of Senator Marco Rubio’s speech at last night Jack Kemp Foundation ceremony bestowing on him its annual Leadership Award.

While the entire speech is a must-read, a passage on a specific health care reform struck this conservative as especially attractive:

In addition to promoting Flexible Savings Accounts, we should create a health insurance system that focuses on empowering people, not bureaucracy. People should be able to buy a health care plan that fits their needs and budget, from any company in America that is willing to sell it to them. And they should be able to buy it with tax free money, just like their employers buy it for many of them now.

That is, until Obamacare fully kicks in.  Since Obamacare’s regulations on employers only apply to full-time workers, there is a regulatory incentive to minimize the amount of full-time workers one employs.  In order to avoid either the stiff compliance costs or the steep penalties for failing to comply, employers are likely to increase the trend of laying-off workers, scaling back hours, or using contract workers in order to avoid the profit-killing expense of paying for all of Obamacare’s new required benefits.

Because of the entirely predictable response to Obamacare’s mandates, millions of American workers are likely to be caught in an employment trap where they work just enough at two or more jobs not to qualify as full-time employees with benefits.  If Republicans are unable to repeal Obamacare, then fixing the tax code to allow independent workers to buy affordable health plans with pre-tax dollars is one of the next best moves.  Marco Rubio seems poised to lead that charge.

Forget the fiscal cliff negotiations.  If you’re a high-earning worker wondering if your taxes will go up in January, Reuters spotlights two new taxes coming your way courtesy of Obamacare:

The 3.8 percent surtax on investment income, meant to help pay for healthcare, goes into effect in 2013. It is the first surtax to be applied to capital gains and dividend income.

The tax affects only individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.

The tax applies to a broad range of investment securities ranging from stocks and bonds to commodity securities and specialized derivatives.

The 159 pages of rules spell out when the tax applies to trusts and annuities, as well as to individual securities traders.

Released late on Friday, the new regulations include a 0.9 percent healthcare tax on wages for high-income individuals.

…

Together, the two taxes are estimated to raise $317.7 billion over 10 years, according to a Joint Committee on Taxation analysis released in June.

These two new taxes take effect January 1, regardless of whether President Barack Obama and Congressional Republicans agree to raise other taxes on high-earning Americans.

As the saying goes, if you want less of something, tax it.  You’d think liberals could see that taxing high-earners into extinction very quickly guts the very social programs Big Government types love.

Last week I blogged here about the decent prospects for several remaining court challenges to ObamaCare. One of those cases I mentioned was that of Liberty University. Today, the Supreme Court sent the case back to the Fourth Circuit to be reconsidered — which, as ScotusBlog explains, is a step forward for the case, by keeping it very much alive.

Summary paragraph:

The Supreme Court on Monday arranged for a Virginia university to go forward with new challenges to two key sections of the new federal health care law — the individual and employer mandates to have insurance coverage.  The Court did so by returning the case of Liberty University v. Geithner (docket 11-438) to the Fourth Circuit Court to consider those challenges.  The Court last Term had simply denied review of Liberty University’s appeal, but on Monday wiped out that order and agreed to send the case back to the appeals court in Richmond for further review.

This is very good news to those of us who believe in liberty — and, of course, for Liberty, too.

Fred Barnes has a great column at the Weekly Standard about various ways conservatives can “push back” against the Obama regency on numerous fronts. It is well worth a read. But one point merits a bit more elaboration — and, indeed, more elaboration than it will receive in this particular blog post, although this will be a down payment on said elaboration. Anyway, Barnes leads with ways that smart people can continue to push back particularly against ObamaCare, and specifically mentions the state governors fighting against the insurance “exchanges” in the program. Barnes mentions there is a lawsuit pending against the administration’s implementation of the federal version of the exchange. What needs emphasis, though, is that the lawsuit, filed by the state of Oklahoma, actually has the potential to unravel a large chunk of the whole ObamaCare scheme. Read about it here.

And that’s not the only suit outstanding against ObamaCare. When the dozens of lawsuits against the liberty-destroying HHS mandate, for example are finally consolidated and heard, I predict a very, very, very heavy likelihood that the mandate will be thrown out. Now, granted, that won’t overturn the whole law, but only that particular regulation. It does, however, allow some other, technical questions to be piggybacked upon the challenge, and those questions, too, can help unravel parts of the superstructure of the law.

Then there is Liberty University’s suit, which for now has been resurrected after wrongly being thought mooted by Chief Justice Roberts’ awful decision on the “individual mandate.” There is certainly a scenario under which a win by Liberty could actually lead to the whole law being adjudged unconstitutional. This bears watching.

Finally, and most importantly, the Goldwater Institute’s lawsuit, especially including its challenge to the Independent Payment Advisory Board, is still alive — and I believe it has tremendous merit. Indeed, I predict that Goldwater will win this case of Coons v. Geithner. And if IPAB is thrown out, there is at least an even chance, in my estimation, that the justices determine it is not severable from the rest of the law, which would mean the whole law would be ruled unconstitutional.

That lawsuit merits a full column of its own, and will receive one soon, here at CFIF.

Recently, Quin argued that Obamacare’s medical device tax would be a huge job-killer if implemented.  A story from Fox News about massive layoffs at medical supply giant Stryker confirms his grim prediction:

The company will cut 1,170 jobs, or five percent of its worldwide workforce…

A “medical device excise tax” included in the mandate imposes a 2.3 percent levy on medical device manufacturers and suppliers, which critics say will raise prices on everything from pacemakers to prosthetics to stents. Companies will be required to pay the tax regardless if they have a profit or loss for the year. The tax is estimated to cost the medical device industry $20 billion.
…

“Here we are, one of the greatest industries in the country, and we’re staring down on Jan. 1, 2013 and the addition of a 2.3 percent excise tax, while meanwhile on the other side all the discussion in Washington is about creating jobs,” Stryker President and CEO Stephen McMillian said during a national conference of medical device manufacturers in Washington, D.C. last September.

Cross-posted at AmSpec with additional commentary, I have a column up right now at USA Today that looks into what might be the most horrid tax in ObamaCare.

Avik Roy, an outside health care policy advisor to the Romney campaign, reminds us why you should never trust a clever lawyer or accountant:

Obamacare was cleverly designed such that its most politically toxic provisions wouldn’t go into effect until after the election. In addition, the Obama administration spent billions of unauthorized taxpayer dollars this year and last so that the impact of its cuts wouldn’t be felt until after the election.

2013: Tax increases and Medicare cuts

Over the next ten years, Obamacare cuts $716 billion from the Medicare program in order to fund its $1.9 trillion in new health spending over the same period. $156 billion of those cuts come from the market-oriented Medicare Advantage program, and those Medicare Advantage cuts start to kick in in 2013. 27 percent of all seniors are enrolled in Medicare Advantage, including 32 percent in Wisconsin and 36 percent in Ohio.

I hope the Romney campaign has been hammering home the part about the Obama Administration hiding the true cost of Obamacare from voters in swing states like Wisconsin and Ohio through aggressive direct mail and ad buys in those states because people need to know that before they decide whether to renew the incumbent’s contract.

For my part, a White House that deliberately hides the truth behind unauthorized spending and delayed implementation timelines is one that can’t be trusted; now or in the future.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

If you haven’t already seen it, the video of Illinois State Senate candidate Barbara Bellar’s single-sentence description of Obamacare is a hilariously accurate indictment of the Obama Administration that promoted it.

I agreed with multiple focus groups last night, and not with the narrow margins pro-Obama in the straight polls, that Romney emerged from the debate last night in a slightly better position than he went in.

In short, he won. He is now in decent shape to eke out a victory.

That said, I think he and his campaign have committed serious political malpractice by not repeatedly and effectively attacking Obama on ObamaCare, either in the debates or in commercials or in TV interviews. It should be especially easy to blast the dozen-plus taxes on the middle class within ObamaCare (including the quasi-tax of the individual mandate, which remains deeply unpopular) — and not just easy but downright simple to blast him on the medical device tax, to which I keep referring in multiple posts and columns here and elsewhere. Of the many, many, many, many opportunities and issues the Romney campaign has left lying on the table, unused, this is the one with the least complications, the most levels of upside, and the least (meaning zero) downside.

Again, I do think Romney has won both debates. I do think he has a slightly better chance now than Obama does to win this election (my last “forced count” had him at 272 electoral votes to 266 for Obama, but that changes every other day). I think his campaign overall is far sharper than it was a month ago.

But Lord Almighty, how can he fail to take advantage of such a big Obama weakness?

Repeat after me: “ObamaCare puts a major punitive tax on pacemakers, asthma inhalers, insulin pumps, and prosthetic limbs like those that make such a difference to our wounded warriors. Even former Democratic Senator Evan Bayh has written that the tax already is costing hundreds of jobs, not to mention all of the negative health effects on people the tax will hurt. Where’s the compassion in that?”

Come to think of it, maybe the wounded warrior aspect of this will give Romney an opening in the “foreign policy” debate……

Remember Darden Restaurants? As I blogged last year, they’re the parent company of Red Lobster, Olive Garden, and LongHorn Steakhouse that decided to codify Michelle Obama’s recommendations about nutrition in the menus of their franchises. But their latest change in corporate policy has far more ominous implications for 1600 Pennsylvania Avenue. From the Orlando Sentinel:

In an experiment apparently aimed at keeping down the cost of health-care reform, Orlando-based Darden Restaurants has stopped offering full-time schedules to many hourly workers in at least a few Olive Gardens, Red Lobsters and LongHorn Steakhouses.

Darden said the test is taking place in “a select number” of restaurants in four markets, including Central Florida, but would not give details. The company said there has been no decision made about expanding it.

In an emailed statement, Darden said staffing changes are “just one of the many things we are evaluating to help us address the cost implications health care reform will have on our business. There are still many unanswered questions regarding the health care regulations and we simply do not have enough information to make any decisions at this time.”

Analysts say many other companies, including the White Castle hamburger chain, are considering employing fewer full-timers because of key features of the Affordable Care Act scheduled to go into effect in 2014. Under that law, large companies must provide affordable health insurance to employees working an average of at least 30 hours per week.

If they do not, the companies can face fines of up to $3,000 for each employee who then turns to an exchange — an online marketplace— for insurance.

So in the course of a year, the Obama Administration has cost me my Olive Garden breadsticks and Darden employees a sizable chunk of their livelihood. I’ll be honest: the first one verges on an impeachable offense in my book. But the second one is inexcusable. It’s underemployment by legislative fiat.

So remember this fact when you hear Barack Obama tout himself as a champion of the middle class in tonight’s debate: the Darden example is representative — working Americans without healthcare and with smaller paychecks.

Last week Byron York highlighted two important Nanny-state features of Obamacare when it gets fully implemented in 2014:

Administration officials and Democrats in Congress have stressed that Obamacare does not permit the IRS to garnish wages or seize cash and assets from taxpayers.

What they mention less frequently is that the IRS has another way to get the money. About three-quarters of U.S. taxpayers receive refunds after filing their returns each year, with the average refund nearly $3,000. After 2014, those people will discover the IRS can take the penalty out of their refunds.

…

The IRS will also determine who is eligible for taxpayer-financed subsidies to purchase health care on the exchanges that will be set up in every state. Anytime anyone’s situation changes — a raise, a new job, a move to another state — that person will be required to report it to the IRS for the purpose of recalculating their eligibility.

This is not a small group. Obamacare will give tax credits for the purchase of health coverage to people who make up to four times the poverty level — at the moment, that’s $44,100 a year for an individual and $88,200 for a family of four. Those millions of Americans had better keep the IRS informed of their status every step of the way.

So, failure to buy a product that the feds approve of can get your tax refund wiped out, while failure to update your status with the IRS like it was Facebook can get you fined?

These are the kinds of details that need to be hammered home in the upcoming debates by Romney and Ryan so that voters can know what a vote for Obama – and Obamacare – really means.

Joel Gehrke of the Washington Examiner flagged a disingenuous statement from the AARP after President Barack Obama’s disastrous debate performance last night:

President Obama invoked AARP to defend his health care law last night, prompting the influential group to release a statement telling him not to do that again.

“While we respect the rights of each campaign to make its case to voters, AARP has never consented to the use of its name by any candidate or political campaign,” the group posted in a statement. “AARP is a nonpartisan organization and we do not endorse political candidates nor coordinate with any candidate or political party.”

The statement is disingenuous because, as I argued in a recent column, AARP stands to gain $2.8 billion if ObamaCare is implemented; an event foreshadowed in an email from a top AARP executive to the White House in 2009 that said, “we will try to keep a little space between us” on health care because AARP’s “polling shows we are more influential when we are seen as independent, so we want to reinforce that positioning…The larger issue is how best to serve the cause.”

AARP already made its choice.  If it wants its money, the group must support its patron, no matter how unpopular he is becoming.

Randy Barnett, writing for the American Spectator, captures the zeitgeist of the Tea Party movement in a rousing essay about the need going forward for a different kind of mindset when judging conservative judicial nominees:

Now we will have an election to decide the ultimate fate of Obamacare. But this election should also be about who will be selected to serve on the Supreme Court. Should Republican presidents continue to nominate judicial conservatives who are enthralled with the New Dealers’ mantra of judicial restraint? Or should they nominate constitutional conservatives who believe that it is not “activism” for judges to enforce the whole Constitution? All future nominees should be vetted not only for their views on the meaning of the Constitution, but for their willingness to enforce that meaning.

With Barnett’s distinction in mind, it’s no wonder that Tea Party-inspired Senators like Marco Rubio (FL), Mike Lee (UT), Rand Paul (KY), Jim DeMint (SC) – and soon-to-be Senator Ted Cruz (TX) – all identify themselves as constitutional conservatives.  Restraint in judging liberalism’s faulty governing assumptions hasn’t gotten conservatives many substantive victories.  We need smart, bold nominees eager and able to make the case for the kind of limited government our Founders envisioned; both in the political branches and on the bench.

My column this week explains how AARP, formerly known as the American Association of Retired People, exploited its relationship with liberal politicians to reap a $2.8 billion windfall from ObamaCare.  The massive payout comes from regulatory exemptions that help AARP increase its lucrative Medigap endorsement scheme.

But it’s not like President Barack Obama’s landmark health law ushered in a new era of revenues for the premier non-profit advocate for seniors.  With $458 million in revenues for 2011, AARP would rank as the sixth most profitable for-profit health care company, according to a report by staff members to Senator Jim DeMint (R-SC).

This puts AARP just behind Humana and ahead of industry giants like Coventry, Amerigroup and Health Net.

Best of all for AARP, because it designates much of its revenue as “royalty fees” instead of “commissions” for endorsing certain private Medicare plans it gets to avoid paying taxes on millions of dollars in income to the Internal Revenue Service.

An investigation (pdf) by House Ways and Means Committee members has asked the IRS to investigate whether AARP’s reporting practices violate federal law, and for good reason.

The investigators note that “In 1994 AARP paid the Internal Revenue Service (IRS) a one-time settlement payment of $135 million in lieu of taxes, resolving an audit over tax returns for years 1985 through 1993 for failure to fully pay unrelated business income tax (UBIT) on its commercial activities.”  And, “In 1999, the IRS and AARP once again reached a settlement to conclude tax years 1994 through 1998 with respect to the treatment of revenues AARP received from licensing and selling its name and logo to insurance companies.”

Sounds like AARP merits more scrutiny from the IRS.

My column this week explains the logic behind an important new constitutional challenge to ObamaCare by the Pacific Legal Foundation, a non-profit property rights law firm.

In its lawsuit, Sissel v. Department of Health and Human Services, PLF argues that the Supreme Court did ObamaCare no favors when it saved the law from a Commerce Clause challenge by reinterpreting it as a constitutional exercise of Congress’ taxing power.

Instead, PLF argues, the Court merely exposed ObamaCare’s newly found taxing authority as an express violation of the Constitution’s Origination Clause, which requires all new tax bills to originate in the House of Representatives, not in the Senate as ObamaCare did.

Though simple and faithful to the Constitution’s text, PLF’s argument is nonetheless novel because some of the Supreme Court’s precedents indicate the Court will not seriously enforce the Origination Clause’s procedure.

But as liberal legal scholar Jack Balkin says in a blog for The Atlantic, Chief Justice John Roberts and his conservative colleagues may be open to rethinking those precedents:

In a previous essay for The Atlantic, I noted that even if a legal argument is currently “off the wall,” it may nevertheless become plausible if enough prominent people get behind it and vouch for it. Support by major political parties is probably the most important factor in quickly moving arguments from “off the wall” to “on the wall.” The challengers’ arguments in NFIB v. Sebelius got as far as they did because the unconstitutionality of Obamacare became virtually the official position of the Republican Party, and Republican politicians and affiliated media pushed the challengers’ claims over and over again. Repeated arguments by conservative politicians, media, and intelligentsia, in turn, probably affected the views of Republican-appointed judges and justices about how seriously to take the arguments.

Members of the media will no doubt ask legal scholars (such as yours truly) whether the PLF’s new constitutional challenge to Obamacare is likely to succeed on the merits. I’ve just given you my answer: not under existing law.

But if reporters have been paying attention to the events of the last two years, they should know that, at least where health care reform is concerned, the considered views of legal scholars are not the most important ones. The real question to ask is whether Republican politicians, right-wing talk radio, and Fox News will get behind the new challenge with the same degree of enthusiasm they had for the first legal assault on Obamacare. If they do, then the mainstream media will no doubt cover the controversy as it did before. If a conservative district court judge takes the arguments seriously, the game is on once more. And then, perhaps, Chief Justice Roberts, given a second chance, will change his mind — again.