Obama's Legal Team Takes a Page from FDR's Playbook

The Patient Protection and Affordable Care Act (PPACA) of 2010, better known as "ObamaCare," is currently being challenged by attorneys general in twelve states. Florida AG Bill McCollum and Virginia AG Ken Cuccinelli are at the forefront of the opposition, proclaiming the law's insurance mandate unconstitutional.

As Obama's legal team gears up for court battles destined to make headlines over the coming year, they are conspicuously moving away from their initial argument that the mandate is protected under Article I, Section 8, Clause 3 of the Constitution, also known as the Commerce Clause. That clause, which has been invoked in a number of cases over the years, states that Congress shall have the power "to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." But as a court hearing in Florida recently revealed, it appears that instead of invoking the Commerce Clause, the Justice Department will argue the individual health insurance mandate as a tax, contrary to what President Obama proclaimed repeatedly while campaigning for support of the legislation.  

Team Obama has taken a page from Franklin Delano Roosevelt's playbook and invoked a tactic utilized for support of the landmark 1937 Supreme Court rulings upholding the Social Security Act (SSA), a strategy which may have profound political ramifications in the future.

As FDR campaigned for support of the SSA in 1935 as part of his Second New Deal, the looming question on many people's minds was whether or not the courts would uphold the act as constitutional. A government-backed pension plan for senior citizens was unprecedented in the country's history, sparking nationwide debate. The act was approved by Congress on 8 and 9 August 1935 and signed by Roosevelt on 14 August; however, legal opposition began to mount almost immediately. 

Approximately two years later, two cases challenging the constitutionality of the SSA went before the Supreme Court. The first, Steward Machine Company v. Davis (which challenged the unemployment compensation program), was argued on 8-9 April 1937, while the second, Helvering v. Davis (which challenged the old-age insurance program), was argued on 5 May. Both cases were decided on 24 May in favor of the act, in a move many believed to have been influenced by FDR's recent threat to "pack the court" with judges who shared his expansionist view of government. That threat stemmed from earlier Supreme Court rulings against parts of the First New Deal.

On 27 May 1935, also known as "Black Monday," the Supreme Court struck down three laws implemented by the First New Deal, decisions that prompted FDR to wage a political attack on the Court through the press. The Court refused to budge, however, and subsequently struck down more elements of the New Deal in early 1936. As a result, FDR receded from his public attacks on the Court until after his reelection and the start of his second term in 1937, at which time he proposed a radical restructuring of the judiciary that struck a nerve nationwide. The president sent a bill to Congress that, if adopted, would have granted him the authority to add multiple new justices to the Court, one for each of the current justices over the age of 70 with at least ten years on the federal bench, as long as the number didn't exceed fifteen. At the time, the average age on the Court was 71. If his plan had gone through, FDR would have been able to appoint 44 new judges to federal courts and six new justices to the Supreme Court. He attempted to sell his idea by accusing the elderly justices of holding up hearings and having a "lowered mental or physical vigor," which would be replaced by "younger blood." 

Unfortunately for the president, his proposal met a resounding defeat following widespread vocal opposition by citizens, politicians, and academics alike. Although this ended FDR's short-lived attempt at packing the Court, many have argued that the threat alone heavily influenced the justices' opinions regarding future New Deal cases. Many of these arguments center specifically on Justice Owen J. Roberts, who began to switch his vote in favor of the administration's policies almost immediately following the threat, subsequently resulting in several 5-4 decisions throughout the spring of 1937. In one case, Roberts shockingly upheld a minimum wage law in Washington state although he had previously found a similar law in New York unconstitutional. This was followed shortly thereafter by his vote to uphold the National Labor Relations Act. Due to Roberts's sudden change in judicial philosophy, the Court shifted from regular 5-4 decisions against New Deal legislation to 5-4 decisions in favor; in the SSA cases specifically, the decisions were 7-2 and 5-4 in favor of the law. In fact, as John Yoo reveals in Crisis and Command: A History of Executive Power from George Washington to George W. Bush, "While FDR lost in Congress, he had won his larger objective.  The Court would not strike down another regulation of interstate commerce for almost 60 years."

Although FDR may have been able to attribute, at least in part, his success in the SSA cases to his threat to restructure the judiciary, his lawyers' efforts should not be understated. In fact, what the president's legal team was arguing before the Supreme Court was much different from the rhetoric being sold to the public. Faced with the decision to invoke the Commerce Clause -- which had proven unsuccessful in previous New Deal cases such as the National Industrial Recovery Act of 1933, the Railroad Retirement Act of 1934, and the Bituminous Coal Conservation Act of 1935 -- or to rely on Congress's power to tax and spend "to provide for the general welfare," the administration chose the latter. 

Before the Court, the argument was that the revenue collected by the new taxes imposed by the SSA would be paid to the Treasury and not earmarked for any specific purpose. FDR, however, had long promoted the old-age insurance program by proclaiming that the monies collected would go into a reserve account with a lockbox on it. During a 17 January 1935 message to Congress, FDR proclaimed that "the system adopted, except for the money necessary to initiate it, should be self-sustaining in the sense that funds for the payment of insurance benefits should not come from the proceeds of general taxation." As Mark R. Levin points out in his best-selling book Liberty & Tyranny: A Conservative Manifesto, "While Roosevelt was insisting to the public that Social Security was an insurance program based on segregated funds and earned benefits, his lawyers were in Court insisting that it was no such thing."

The Supreme Court upheld the act, with Justice Benjamin N. Cardozo writing the majority opinion in both Steward Machine Co. v. Davis and Helvering v. Davis. Cardozo and the Court found that, given that the proposed tax would raise revenue for general purposes and would not fund anything in particular, it was a constitutional excise tax. Therefore, Social Security was never validated as a social insurance program, as many have come to believe today. 

The Obama administration has taken a page straight out of FDR's playbook. During a hearing in federal district court in Florida recently, the Justice Department argued, among other things, that ObamaCare's individual mandate -- responsible for the majority of controversy surrounding the law -- is actually a tax. Although the case will not reach the Supreme Court for some time, it will be important to watch how this argument develops. As these lawsuits make their way through the court system, and inevitably gain more publicity, the resulting coverage could spell disaster for the Obama administration. Because the president repeatedly pledged that the new health care law explicitly was not a tax, these cases may quickly catch voters' attention. During a spirited interview with George Stephanopoulos in September of 2009, the president repeatedly claimed that the individual mandate was in no way a tax. Here is part of that exchange:

STEPHANOPOULOS:  I wanted to check for myself.  But your critics say it [the mandate to buy health insurance] is a tax increase.

OBAMA:  My critics say everything is a tax increase.  My critics say that I'm taking over every sector of the economy.  You know that. Look, we can have a legitimate debate about whether or not we're going to have an individual mandate or not, but...

STEPHANOPOULOS:  But you reject that it's a tax increase?

OBAMA:  I absolutely reject that notion.

Similar to FDR, Obama is claiming that the newly implemented law does one thing while his lawyers are in court claiming it does something else. The problem with this particular argument is that the individual mandate does not appear to be a tax, but rather a fine for not engaging in a form of economic activity. The imposition of such a fine is unprecedented, as the federal government has never forced individuals to purchase a certain product or service with the threat of fines or imprisonment. 

Several states require individuals to purchase auto insurance, a point also brought up by Obama in the Stephanopoulos interview; however, this decision is left to the discretion of the states under the 10th Amendment. It will be interesting to witness how these cases develop in the near future and how team Obama will continue to argue their position. If the president continues to claim the mandate as a tax, as appears will be the case, it could prove politically detrimental during his reelection bid. The progress of these arguments should be monitored closely over the coming weeks and months.

The author would like to acknowledge Mark R. Levin, whose initial discovery of the parallel between these cases inspired the research and writing of this article.
The Patient Protection and Affordable Care Act (PPACA) of 2010, better known as "ObamaCare," is currently being challenged by attorneys general in twelve states. Florida AG Bill McCollum and Virginia AG Ken Cuccinelli are at the forefront of the opposition, proclaiming the law's insurance mandate unconstitutional.

As Obama's legal team gears up for court battles destined to make headlines over the coming year, they are conspicuously moving away from their initial argument that the mandate is protected under Article I, Section 8, Clause 3 of the Constitution, also known as the Commerce Clause. That clause, which has been invoked in a number of cases over the years, states that Congress shall have the power "to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." But as a court hearing in Florida recently revealed, it appears that instead of invoking the Commerce Clause, the Justice Department will argue the individual health insurance mandate as a tax, contrary to what President Obama proclaimed repeatedly while campaigning for support of the legislation.  

Team Obama has taken a page from Franklin Delano Roosevelt's playbook and invoked a tactic utilized for support of the landmark 1937 Supreme Court rulings upholding the Social Security Act (SSA), a strategy which may have profound political ramifications in the future.

As FDR campaigned for support of the SSA in 1935 as part of his Second New Deal, the looming question on many people's minds was whether or not the courts would uphold the act as constitutional. A government-backed pension plan for senior citizens was unprecedented in the country's history, sparking nationwide debate. The act was approved by Congress on 8 and 9 August 1935 and signed by Roosevelt on 14 August; however, legal opposition began to mount almost immediately. 

Approximately two years later, two cases challenging the constitutionality of the SSA went before the Supreme Court. The first, Steward Machine Company v. Davis (which challenged the unemployment compensation program), was argued on 8-9 April 1937, while the second, Helvering v. Davis (which challenged the old-age insurance program), was argued on 5 May. Both cases were decided on 24 May in favor of the act, in a move many believed to have been influenced by FDR's recent threat to "pack the court" with judges who shared his expansionist view of government. That threat stemmed from earlier Supreme Court rulings against parts of the First New Deal.

On 27 May 1935, also known as "Black Monday," the Supreme Court struck down three laws implemented by the First New Deal, decisions that prompted FDR to wage a political attack on the Court through the press. The Court refused to budge, however, and subsequently struck down more elements of the New Deal in early 1936. As a result, FDR receded from his public attacks on the Court until after his reelection and the start of his second term in 1937, at which time he proposed a radical restructuring of the judiciary that struck a nerve nationwide. The president sent a bill to Congress that, if adopted, would have granted him the authority to add multiple new justices to the Court, one for each of the current justices over the age of 70 with at least ten years on the federal bench, as long as the number didn't exceed fifteen. At the time, the average age on the Court was 71. If his plan had gone through, FDR would have been able to appoint 44 new judges to federal courts and six new justices to the Supreme Court. He attempted to sell his idea by accusing the elderly justices of holding up hearings and having a "lowered mental or physical vigor," which would be replaced by "younger blood." 

Unfortunately for the president, his proposal met a resounding defeat following widespread vocal opposition by citizens, politicians, and academics alike. Although this ended FDR's short-lived attempt at packing the Court, many have argued that the threat alone heavily influenced the justices' opinions regarding future New Deal cases. Many of these arguments center specifically on Justice Owen J. Roberts, who began to switch his vote in favor of the administration's policies almost immediately following the threat, subsequently resulting in several 5-4 decisions throughout the spring of 1937. In one case, Roberts shockingly upheld a minimum wage law in Washington state although he had previously found a similar law in New York unconstitutional. This was followed shortly thereafter by his vote to uphold the National Labor Relations Act. Due to Roberts's sudden change in judicial philosophy, the Court shifted from regular 5-4 decisions against New Deal legislation to 5-4 decisions in favor; in the SSA cases specifically, the decisions were 7-2 and 5-4 in favor of the law. In fact, as John Yoo reveals in Crisis and Command: A History of Executive Power from George Washington to George W. Bush, "While FDR lost in Congress, he had won his larger objective.  The Court would not strike down another regulation of interstate commerce for almost 60 years."

Although FDR may have been able to attribute, at least in part, his success in the SSA cases to his threat to restructure the judiciary, his lawyers' efforts should not be understated. In fact, what the president's legal team was arguing before the Supreme Court was much different from the rhetoric being sold to the public. Faced with the decision to invoke the Commerce Clause -- which had proven unsuccessful in previous New Deal cases such as the National Industrial Recovery Act of 1933, the Railroad Retirement Act of 1934, and the Bituminous Coal Conservation Act of 1935 -- or to rely on Congress's power to tax and spend "to provide for the general welfare," the administration chose the latter. 

Before the Court, the argument was that the revenue collected by the new taxes imposed by the SSA would be paid to the Treasury and not earmarked for any specific purpose. FDR, however, had long promoted the old-age insurance program by proclaiming that the monies collected would go into a reserve account with a lockbox on it. During a 17 January 1935 message to Congress, FDR proclaimed that "the system adopted, except for the money necessary to initiate it, should be self-sustaining in the sense that funds for the payment of insurance benefits should not come from the proceeds of general taxation." As Mark R. Levin points out in his best-selling book Liberty & Tyranny: A Conservative Manifesto, "While Roosevelt was insisting to the public that Social Security was an insurance program based on segregated funds and earned benefits, his lawyers were in Court insisting that it was no such thing."

The Supreme Court upheld the act, with Justice Benjamin N. Cardozo writing the majority opinion in both Steward Machine Co. v. Davis and Helvering v. Davis. Cardozo and the Court found that, given that the proposed tax would raise revenue for general purposes and would not fund anything in particular, it was a constitutional excise tax. Therefore, Social Security was never validated as a social insurance program, as many have come to believe today. 

The Obama administration has taken a page straight out of FDR's playbook. During a hearing in federal district court in Florida recently, the Justice Department argued, among other things, that ObamaCare's individual mandate -- responsible for the majority of controversy surrounding the law -- is actually a tax. Although the case will not reach the Supreme Court for some time, it will be important to watch how this argument develops. As these lawsuits make their way through the court system, and inevitably gain more publicity, the resulting coverage could spell disaster for the Obama administration. Because the president repeatedly pledged that the new health care law explicitly was not a tax, these cases may quickly catch voters' attention. During a spirited interview with George Stephanopoulos in September of 2009, the president repeatedly claimed that the individual mandate was in no way a tax. Here is part of that exchange:

STEPHANOPOULOS:  I wanted to check for myself.  But your critics say it [the mandate to buy health insurance] is a tax increase.

OBAMA:  My critics say everything is a tax increase.  My critics say that I'm taking over every sector of the economy.  You know that. Look, we can have a legitimate debate about whether or not we're going to have an individual mandate or not, but...

STEPHANOPOULOS:  But you reject that it's a tax increase?

OBAMA:  I absolutely reject that notion.

Similar to FDR, Obama is claiming that the newly implemented law does one thing while his lawyers are in court claiming it does something else. The problem with this particular argument is that the individual mandate does not appear to be a tax, but rather a fine for not engaging in a form of economic activity. The imposition of such a fine is unprecedented, as the federal government has never forced individuals to purchase a certain product or service with the threat of fines or imprisonment. 

Several states require individuals to purchase auto insurance, a point also brought up by Obama in the Stephanopoulos interview; however, this decision is left to the discretion of the states under the 10th Amendment. It will be interesting to witness how these cases develop in the near future and how team Obama will continue to argue their position. If the president continues to claim the mandate as a tax, as appears will be the case, it could prove politically detrimental during his reelection bid. The progress of these arguments should be monitored closely over the coming weeks and months.

The author would like to acknowledge Mark R. Levin, whose initial discovery of the parallel between these cases inspired the research and writing of this article.

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