knowing the interim remedy could turn out to do -- be permanent if they do not come up with a new formula. it is an interesting question. they will see how the litigators try to position that as a possible alternative. >> for those and want to look the text, it is section 4b. >> joe murphy, litigating attorney in washington, d.c. this is a matter that has not been addressed yet. we have had a housing crisis, and there are states and counties and is both governments that are beginning to tinker with mortgages and underlying contracts. has anyone seen any cases coming

up that involve article one, section 10, which prohibits state impairment of contract, the contracts clause? >> i would just say there are not any pending cert petitions to that question. there is nothing on the brink that i am aware of. >> there are a couple of cases in the court challenging dodd- frank, which is completely not related, but the most notable is to let the motion practicing district court right now. this will be the last question.

>> i am with the washington legal foundation. my question generally is about national security cases in the supreme court. until 2008, a lot of challenges reached the court. since then, there have not been any -- many, and the only case they took was the clapper case, in which it looks as though they will reverse a lower-court decision that went in favor of the plaintiffs. i wonder if anyone wants to comment as to why the court seems more reluctant to take cases than they were previously, and it doesn't have something to do with liberals on the court having greater faith in the obama id administration's handling of foreign policy. >> clearly we have handled all of our foreign policy problems. >> without some detail on

detainee's and over a fair judges,f lower court's the supreme court has showed no willingness to way back into that, and the only case, as you mentioned, has the clapper case, which involves a question about whether particular individuals have standing to challenge procedures mandated by the fisa amendment. it is an interesting case, but not a big ticket case. i suppose one could infer from the fact that the court has not waded into the cases that the supreme court is generally comfortable with the way the d.c. circuit has handled those issues. again, that is an inference from silence because we do not have any indication of whether the supreme court is, in fact,

comfortable. >> how about a hand for our panel. [laughter] [applause] please stay in your seats for the simon lecture. >> now, we will continue the discussion on the supreme court with former solicitor general and lead attorney argument against the health care law, paul clement. he outlines the case's path to the court, how it was argued in court, and his surprise in the court's decision. also from the cato institute, this is just over one hour. >> i want to welcome those of you who just joined us for the simon lecture. i am walt -- roger pilon. i want to welcome those in the c-span audience, who might have just joined us for this sign and

lecture. each year, we conclude our constitution day conference with the annual lecture named in honor of the late ken simon, a pittsburgh engineering, an entrepreneur and industrialist who was a great friend of liberty and the cato institute, devoted to furthering the thought of the american founders. this series has brought a distinguished group of justices, legal scholars to the podium to discuss in doing constitutional issues. our first simon lecture was on constitutionalism, and it was given by douglas h. ginsburg, then the chief judge of the d.c. circuit. since then, lectures have covered subjects ranging from property rights to religious liberty, the ninth amendment, progressivism and more, including privacy, the subject

of the lecture last year by the chief justice -- judge of the ninth circuit. that is the lead essay indicate a supreme court review, which has just come out for those of you in the city budget c-span audience, and you can get simply by going -- for those of you on the c-span audience, and you can get a simply by going on cato .org. we begin the second day of lectures with no less a distinguished speaker, the honorable paul clement, who is known as one of the most gifted -- gifted practitioners to appear regularly before the supreme court. he is currently partnered with bancroft pelosi washington, although his practice takes him -- l l c in washington, although his practice takes to run the united states.

prior to his confirmation as solicitor general, he served as acting solicitor general for nearly a year, and as principal deputy solicitor general for over three years. he has over seven years of service in the office, the longest time of continuous service by solicitor general since the 19th century. he has argued over 60 cases before the supreme court, including nfib v sibelius. he received his master's degree from the georgetown university school of service, and a master's degree in economics from cambridge university. he grabbed the to graduate from the harvard law school where he was the editor of the harvard law review. he served on the u.s. court of

appeals in the d.c. circuit, and for and since the the the -- and teens kolyma -- justice scalia. his subject today is titled " october turned 2011 -- the constitutional moment." please welcome paul clement. [applause] >> thank you, roger, for that kind introduction to it is great to be at the cato institute. i have attended a number of the simon lectures myself, so it is an honor to present thoughts on october term 2011, a constitutional moment. i had the distinct pleasure of arguing the challenge to the affordable care act on behalf of 26 states. very fact that 26 states

combined together in a challenge against the federal statute is a remarkable development and the case itself was remarkable in almost every respect. i want to talk principally about that case and the court's decision. i am under no delusions that there is anything left to be said about the health-care case since it has been as analyzed as any case in recent memory, and that is consistent with this entire case. i have been incredibly privilege to be involved in 60 supreme court cases that are argued, others that i briefed there is no case that i can remember that captured -- briefed. there is no case that i can remember the capture the public imagine the way the health-care case did. i also think it is fair to say the health-care case had a unique arch. sometimes there is an act of congress passed and it is

instantly identified as having a constitutional problem that is probably brought to the supreme court. one could think of another case i was involved in in my time of government, the constitutional challenge to them again fine gold act. there was a case -- the mccain- fine gold act. the opponents oppose it on the first amendment grounds. by contrast, with the affordable care act, there was an incredible policy debate. anybody in washington remembers the procedural maneuvering in order to get that statute passed, especially after scott brown was elected in massachusetts, and seemingly the votes were not there, but they managed to find them. in a very rigorous debate about the policy merits of the affordable care act, there really was not a robust debate about its constitutionality.

that is something that really began in the waning days of the act and was promptly followed by litigation that ensued. when this litigation was first brought, the reaction in many quarters was not just that the legislation was a bit of a long shot or the litigation was intriguing, but really that it was just frivolous and it had no chance of success. a commentator certainly someone who looks at things objectively, did the challengers 1% chance of success things took a turn, and that is why i think the acrch is interest -- arc of the case is interesting. that is with the justice in for

the striking the act down and focusing on the individual mandate. also, and severability analysis, struck down the balance of the statute. in any event, those decisions by the district courts were a turning point, but i think it is fair to say that at least in the popular press the narrative went from this challenges frivolous, to this is a challenge that only a republican appointee to the federal judiciary could love, and people pointed out correctly that there was a one-for-1 correspondence between the party of by a president appointed a district court judge, and how the judge resolved and affordable care act. democratically appointed judges upheld the law, and republican appointees struck the individual mandate down. things were more complicated and interesting at the court of

appeals level. at the court of appeals level you have judges with this easy narrative of all you need to know is what the party of the president will pointed them was and you know how they will vote. that broke down at the court of appeals level. much attention was given to the fact that judge jeff sutton voted to uphold the statute. judge silberman, why clerked for, -- who i corp. for, also cast a vote to uphold the law. by contrast, judge hall in the 11th circuit voted to strike down the law, and she was appointed by president clinton. so, this familiar pattern broke down. seemingly, what should have been the death knell of suggesting that this litigation was frivolous, was the supreme court's action in taking the

case. not only did they take the action, -- case, which once the 11th court strike it down, i did not think it surprise people that the supreme court took it for review, but what did surprise people is the way and of the case -- they divided the occasion to four support arguments, dedicated a full week of supreme court argument to this case, and ultimately six hours of argument time to the case that proved not to be enough because the court kept the advocates but there -- in discussing spending power issues on the last day. -- up there longer, in discussing spending power issues and the last date. i was involved in them the ken feinberg legislation, the mcconnell litigation, and in that case, i was remembering that we discussed among

ourselves what would be the maximum amount of time the test the supreme court to dedicate to we single case -- we could ask the supreme court to dedicate to a single case, and we came up with four hours. here is the supreme court, and its own motion, granting six hours of argument time. my own involvement does not run from the beginning. i was brought in at the appellate level. ingesting anecdotes that i will pick up on in a moment, i was actually asked about the case in a media interview before i had any involvement with it. i was and npr show with walter dellinger, who was advancing the dominant view of people in legal academia, that the suit was frivolous, and i had not studied the papers, but i had some basis for understanding the challenge the government faced because in my own time in the solicitor

general office i had the opportunity to defend acts of congress against the argument that they exceeded congress' enumerated powers. when i was first asked about it, i said this would come down to whether the government can articulate a limiting principle. if the government cannot committee limiting principle of why they could do this, why they could forced people to buy insurance, but then not force people to buy anything they want, then they will probably win. on the other hand, the challenge for the government is to be able to articulate why it is if the government can do this it does not mean the end of judicially enforceable limits on congress power. without having delve into the case, again, having played the role of the government lawyer, i knew this principle would be important. this case ultimately gets to the supreme court of the united states, and they divide it into four separate arguments.

especially in light of the opinions that emerged, i think it is fair to say there are six separate issues the supreme court dealt with in this case. but first, and far away -- far and away the least interesting was the issue of the entire digest -- anti-intervention case. this came to the right of whether the court -- of whether the court had the right to listen to the case. a court relied on the act to decide. this was an argument they have to take seriously. the dedicated the first day of arguments to the case the question, and they decided unanimously that they did have jurisdiction. the one interesting thing about the reasoning was that for purposes of the anti-injunction act, the fact that congress labels the individual mandate a penalty and not a tax was pretty much the outcome-determinative

they said they would take congress at its word. if they do not call it a tax, they do not qualify for the special rules of jurisdiction that say if you want to challenge a tax you cannot just go into tax and say i do not like the tax. you have to pay the tax, seek a refund, and mount your challenge to the law. then, we get to what really, in terms of the argument schedule was just one issue -- the constitutionality of the individual mandate. in reality, it is three separate issues -- when the individual mandate is justified and the commerce -- commerce power, whether it is justified and the necessary and proper power of the constitution, and whether or not it can be justified under the taxing power. in thinking about the burdens on the challengers, i think it is worth focusing on the fact that these are three issues and the government only needed to

prevail on one of these issues. these are three separate arguments for why the federal government had the power to pass this statute. so, i think back to the statement that there was only a 1% chance of prevailing. part of the challenge for those attacking the statute was they did have to run the table on these arguments, and to make matters more difficult, i think it was conventional wisdom and a part of conventional wisdom that did not turn out to be wrong, but there were four votes on the court ready to uphold the law and any one of these grounds. when that meant in practical terms is that in order to prevail, the challengers need to run the table, and i'm these three issues get 15 out of 15 available votes the good news is the challengers managed the remarkable feat of getting 14 out of 15 votes. [laughter]

the bad news is that does not get you a majority opinion, striking down the law on these grounds i think, and you might think this is hyperbole or somebody -- i actually think and you might think this is hyperbole or someone tried to spin a mitigation dispute, but i think it is accurate to say that the supreme court in its decision struck down the individual mandate, demanded that each individual purchase insurance, because it says that congress lacks the power under the commerce power or the necessary and proper power to impose a mandatory purchase of insurance. of course, it says the statute is valid under the taxing power, but it says that it only did that by re-characterizing the statute does not a mandate to purchase insurance, but as a tax on the status of not having insurance. so construed, they upheld it as a valid exercise of the taxing

penalty. i think it is important to recognize a that is a different statute for the statute congress actually passed and it has different practical effect. most law abiding citizens, if they are told there is a constitutionally valid mandate to purchase insurance will purchase insurance. i think most people, if told that they have to pay taxes if they do not purchase insurance will want to know how much is the tax and how much does the insurance cost, then they will make a rational decision about whether or not to purchase health insurance, and some people will choose to pay the tax, and the practical consequence is the number of individuals that will remain uninsured will be higher under a regime that simply taxes the status of being uninsured appellative to an actual individual mandate that everyone must purchase -- greece to an actual individual mandate that

everyone must purchase insurance. i am subject to the effect of this is spin, but cannot take my word for it, take the chief it.ice's word for according to the chief justice's opinion, he says of his basic argument about the taxing power as follows -- "the government tax power argument asks us to view the statute differently than we did in considering its commerce power theory. in making the commerce clause argument, the government defended the mandate as a regulation requiring individuals to purchase health insurance. the government does not claim that the taxing power allows congress to issue such a command. instead, the government asks us to read the man did not as ordering individuals to buy insurance, but rather as imposing a tax on those i do not by." he continues later, "under the

tax theory, the man it is not a legal command to buy insurance instead, it is a tax hike and certain taxpayers that do not have health insurance. -- health-insurance." money which many might think ok, but that is not it -- many might think ok, but that is not a strict reading. the most straightforward reading is that it commands individuals to purchase insurance, but the chief justice did not embraced for purposes of taxing power the most straightforward reading of the statute. to the contrary, he made a point of making clear that his reading of the taxing power version of the statute was not the most natural or straightforward reading of the statute, and made that in response to justice ginsburg, who wrote an opinion that made what is on the surface a fair point -- she says to the

chief justice, look, if you're going to uphold the statute on the taxing power, why have you issued an opinion that goes out of your way to say that congress lacks the power under the commerce power and the necessary and texting -- proper power? that seems gratuitous. if you will uphold the taxing power, that should be the only issue address, and your response to justice ginsburg by saying " the statute reads more naturally as a command to buy insurance than a tax and i would uphold it as a command if the constitution allows it." , of course they found the constitution did not allow for that. the chief justice makes a distinction about is clear as one could. he writes "the federal government does not have the power to order people to buy health insurance." two sentences later, "the

federal government does have power to impose a tax on those without health insurance." i think, again, to emphasize this point, that the chief justice's own analysis makes clear that the statute that emerges is not the individual mandate. the supreme court, despite what you read in the papers, did not say it was constitutional to impose a mandate an individual to purchase a product they would not otherwise want. the supreme court simply and only a pair of the power of the federal government to impose a tax on those that do not have health insurance. just to underscore the notion that that is quite different from the statute that congress passed, remember, the point of the health care law was to get people who did not have insurance, and enable them to have insurance. was not an effort to tax the people that did not have health insurance, but that is the law that is up held in the end.

now, if i could add one word of note about taxing power, which is this analysis that there is the power to levy a tax on those that do not have insurance cannot be the end of the analysis and chief justice acknowledges this, saying that the constitution imposes limits on the ability of the congress to impose a direct tax on the people without apportioning that upon the states. you can think about that as a limitation on the taxing power, but it is very much also a federalism position, because the idea the framers had was the power to impose a direct tax was a powerful authority to grant the federal government and had the potential to be done in a way that had favoritism among the states, which was one of the principal concerns of the founding generation. the people that went to the constitutional convention from

their individual states were concerned not to give the populous states the power to overwhelm the less populous states and the like. it is an important federalism principal and went on taxing power. the chief justice had to confront the question of whether or not this was an impermissible, direct tax because it was clearly not apportioned. my last " from the opinion, "it does not fall within any recognized category of a direct tax." i have to say, i think that is an issue where the supreme court might and benefited from more extensive briefing. if you go back to the commerce power argument, the fact that congress had never done this before, that for two hundred years, congress had every incentive to impose mandates on people to solve social problems, but never used that authority in

over two hundred years, that was the was one of the challengers most powerful argument, but when it comes to the taxing power, the fact that this tax does not come within any recognized category of direct tax or indirect tax is seen as the key to why it is not an impermissible direct tax. the other part of the analysis focused on here was that in the framing generation there was a tax on owning a carriage, and that divided the framers. madison thought that was impermissible. hamilton thought it was a permissible, indirect tax. the issue made it to the supreme court, and the supreme court sided with hamilton, but the problem is, as the chief justice's own analysis makes it clear, this is not a tax on buying health insurance, it is a tax on not having health

insurance. the analogy is not a tax on having a carriage, it is a tax on not having a carriage, and it is hard to see how the framers would have thought those were the same thing. if court's analysis, they say the reason the tax on a carriage is not a direct tax on you as an individual is because it is effectively a tax on purchasing a carriage, but that same reason is indeed a direct tax that operates directly on the individual i promise you six issues. i've only gone to four so far. -- individual. i promise to six issues and i'm only gone to four, so that me get to the spending power issue. by a 7-2 majority, the supreme court put a limit on the spending power of congress, and, indeed, struck down part of the affordable care act as

unconstitutional, because it impermissibly call worst the states to produce a peak in the medicaid program, and it did this -- to participate in the medicaid program, and it did this by telling the states that even though you have been participating for 30, 40 years, and give you reimbursement formulas at half-levels, you need to take new money and cover? the expanded universe of medicaid patients, and -- covered the vastly expanded universe of medicaid patients, and if you do not, we will take away the funding stream that you relied on for past medicaid funds. it was essentially that leverage, the past dissipation in the program, using it as it waits -- passed the dissipation in the program, and using it as a way for the states to accept the money. the supreme court recognizes the

importance of one of the key values of federalism, and that is accountability. the court says permitting the federal government to force states to implement a federal program would threaten the political accountability to our federal system. if the states are forced to take this money, the notion is one way -- 1 has no way of knowing who to complain to. if you do not like the way the medicaid program is administered and it is administered by the state, you naturally complain to the state, but if they have no choice but to participate, that is a fundamental accountability problem and the court saw that. they also focused on the key been a link to the existing funding streams, and use that as the basis for finding the statute unconstitutional. as i say, in some of the coverage of the case, the spending power to issue was swept aside and largely ignored, but there is no mistaking the court's conclusion that there is

a constitutional violation. the court says that we determined that section 1393, the. that allows the court to take away existing funding, -- the part that allows the court to take away existing funding was not constitutional. the sixth issue is the severability issue. because the court only struck down the one provision, the medicaid provision, the court did not bring along the severability issue, but is now worth a -- noteworthy that the four justice system ready not just to strike down the individual mandate, the medicaid exemption, the act, and it is quite remarkable to the challenges came within one vote on that one nation to win delegates in the statute as a whole. i am not here to talk about could of, should have, would have, but i want to talk about a

constitutional moment and i want to focus on the practical consequence -- consequences of the with the court decided this case, because my own view is that this decision that emerges is not either as a practical or theoretical matter fungible with the decision that simply said all of this is fine under both the commerce power and the spending power, and there is nothing unconstitutional here at all. now, one of the points i have already alluded to, which is i do think that as a practical matter, the number of people that stay uninsured, the difference today is the tax and a mandate is -- the difference between a mandate and a tax is significant. i think more people would have complied with the mandate than will now make what the chief justice tells them is their choice to make, whether or not it is economically rational for them to decide not to purchase health insurance and pay the tax.

one last comment from the chief justice who says "it might be a reasonable financial decision to make the payment rather than purchase the insurance." in vision that this decision could matter. the other thing that matters is the states now have-out right under the medicaid statute, and based on an article i saw in " the wall street journal, " six states have decided to opt out of the medicaid expansion, and the more that popped out, the more individual that congress intended to have covered will remain on covered. the combined effect of the difference between the tax and the mandate, and the uninsured and states that decline the medicaid extension funds, will mean there are substantially less people who were uninsured

that will be covered under the law that congress envisioned, and that fact might cause congress to have to revisit the it is -- this issue, and i think the more states that opt out of the medicaid expansion, the more of a natural constituency there will be in congress to reconsider this expansion. if the states have decided not to dissipate, they have made difficult choice. taxpayers in their states will still be taxed to from the medicaid expansion in other states, so that is a situation where they have made a tough decision and there will be a natural constituency to reconsider the health care law, whether that is a wholesale or retail. that is a force that has to be reckoned with. i also think there are important jurisprudence consequences. i know there has been a healthy debate about whether the glass here is half full or half empty, and i do not mean to enter that

debate. i simply mean to objectively say that i think there are significant differences about the way they decided this case and the way they could have decided this case. i've already talked about the practical consequences, but i want to talk about the jurisprudence consequences as well. start with the idea that the states in this case were so enormous, not because it was the president's signature legislative achievement and the constitutional validity of it was in an election year, as i have no illusions that is what attracted a great deal of media attention to the case and gave it a life of its own. what makes the case so when court does that federalism is at the heart of our constitution and i will quote justice kennedy who said "federalism was the unique contribution of the framers to political science and political theory," and he goes

to a great friend, jordan would and then continues, "although on the surface it might seem counterintuitive, it was the inside of the framers that freedom was enhanced by the commission of two governments, not one." separation of power is great, but we borrow back from some other countries. federalism was a unique contribution and it was a major theme of the rehnquist court. one of the major accomplishments for chief justice rehnquist was to reignite the federalism instinct and the limits on the federal government. i think it is also fair to say that many people look at their rehnquist court and its federal was some cases and felt that in the end the court was running out of steam. the court decided lopez, morrison, but then, and some might blame me, the court decided the race case, where the

court said the natural prohibition on marijuana extended all the way to the possession of medical marijuana, even though california had made it legal. there was a sense that federalism was important, but losing steam. it was also important to recognize that the two appointments of president george w. bush had very different backgrounds from the justices that they replaced, and based on those backgrounds it was fair to question whether those justices would have the same in 8 dedication to federalism principles as the justices they were replacing. justice o'connor, most obviously, but chief justice rehnquist as well. they cut their teeth in the state system. they had substantial backgrounds on state courts, and with respect to the chief justice and justice and legal, although they had wonderful backgrounds, their backgrounds were in the federal

government, so there was reason to wonder when they were appointed, it sure, based on their service in the executive branch they would probably understand separation of powers principles instinctively, but it is hard to know where they would be on federalism issues. because of that, perhaps, there were bold predictions in this case that this was not going to be a close case. i talked about the part of this case, but i think it is worth recognizing that even on the eve of arguments there was a substantial body of opinion that suggested that this decision was going to be eight-one, or 7-2 in favor of the statute against the challengers, and that was not assuming the abstract. it was specific to the commerce clause in particular, and i will take one example, but it is only one of many. linda greenhouse will a story called "never before." i will give you one paragraph.

she argues, "free of convention and fresh from reading the main briefings in the case to be argued before the court next week, i'm here to tell you that the belief of the sides equally balanced here is simply wrong. the constitutional challenge to the law's requirement for people to buy health insurance, specifically the argument of the mandate exceeds congress' power under the commerce clause is rhetorically powerful, but analytically so weak that it dissolves under close inspection." there is just know they're there. in the run-up, there was either a strong body of position that bleak -- received justice scalia's vote could be in play. my point is not to call out any one that predicted the outcome in correctly, because as far as i know everybody predicted the

outcome in correctly. show me the person that shows me that it would come down to the chief justice's vote on the taxing power, i would like to meet that person. my point is not to pick up people and say you missed the boat, but my point is there was a responsible body of opinion even on the eve of arguments that the spending power challenges were not just narrowly -- narrowly wrong, but simply frivolous arguments. the always quotable walter dellinger made this argument on the eve of arguments, saying " you know how people were saying it was frivolous and they're not saying that any more? well, i'm still saying it is frivolous." nonetheless, that opinion was out there. the real point that i would like

to make today is that if those prognosticators, that substantial body of opinion that said this was going to be an eight-one, seven-two landslide were correct, then we really would have a constitutional moment on our hands. we really would see the death of any meaningful effort by the supreme court to enforce the enumerated powers limits on the federal government and to enforce the basic federal balance. i think that really would have been quite remarkable because we have seen, certainly since the rehnquist court, but if you take a broad view throughout our constitutional history, a long effort come a long struggle to one for some meaningful limits on the commerce clause. i think everyone of the justices, at some level, will concede that the commerce power is fairly broad. i also think that all nine justices recognize there has to be limits on the commerce power otherwise the whole point of the

new breed in the various powers of commerce which in degrading the various powers of commerce is besides the point -- enumerated in the various setpos of commerce is besides the point. what happened in this case is that five justices did adopt what has been at least the dominant view since the lopez decision, which is that the court can simply not get out of the business of enforcing federal laws and limits on the power of the federal government. here, too, i will be quoting justice kennedy, "the federal balance is to essential of by part of our constitutional structure and place to lie low role in securing freedom for us to permit an inability to intervene when one or the other level of government has tipped the scales too far." he also recognize this is not in

the area where there are strong institutional incentives for congress to police itself and exercising its power, so the court has to play a role but he and if the lines are somehow difficult to articulate, and difficult to enforce and practice. importantly, i believe, at the cato institute of all places, it is important to recognize that justice kennedy there, just as he did in the bond opinion, _ that federalism is not there to protect the states. it is a fundamental protector of the individual liberty and formed by the idea that the levels of government closer to people are much more likely to be respected of other people's liberties. before i finish, i do have to in deference to the academic nature of this lecture consider an objection that there was a constitutional moment essentially averted. that is, what about the taxes. there are forceful limits on the spending power. it is all well and good there

are enforceable limits on the commerce and necessary and proper power, but what about the tax power? i think there are ways that the tax power is different enough from these other powers that it is still significant that the court decided what it decided on the commerce on the commerce power. i think it is different practically. then with an actual individual mandate. it is also different on a more theoretical level. that power under the commerce power if you have that power it is not just that you can impose a penalty, you can do anything you want to enforce the mandate. on the taxing power, there is only the power to impose a tax and the chief justice went out of his way to say at some point a tax would be too high that it would amount to the same thing

as an impermissible commerce regulations. for many taxpayers, they had a real option to pay the tax instead of biting the premium. -- buying the premium. they're they are different structurally. i do not think there is much in the structure of congress and the way it gets elected for it to be a logical protector or governors which on the power. they of the federal government paying bank they have an instinct that if there is outrage, there must be that there needs to be a federal law to address it. i think it is very difficult to raise new taxes for a reason. taxes are politically very unpopular and i think it is fairly obvious for those that we

are around at that time when the health care law passed that if it was labeled a tax, it would not have passed. there was no appetite for increasing taxes been been one of the attractive features of the individual mandate is it operated like a tax on relatively healthy and young individuals who were forced to buy something they did not need. but it was not labeled a tax. i think that in the future if it remains clear that the only way you can have something like the individual mandate, i think it will be much more difficult politically to pass an individual mandate or a tax that is similar in the future. why did congress is essentially get one free pass in the affordable care act? why didn't those same considerations caused the court

to insist that if congress was not willing to call it a tax it should not get the benefit of tax power? let me say before sitting down that the spending power i think is also critical and should not be overlooked. i think it would have been hard enough for anyone to predict that the chief justice would be the deciding vote. i think it is very important for two reasons. one. is there is a real difference between the spending power argument and the commerce power argument. if the federal government cannot articulate a limit on the commerce power, the federal government typically loses. what is the arctic tillable limit on the spending power? when does the inducement of

money but come to co-workers? if the government cannot articulate a limit on commerce power, then it calls into question the whole process of enumeration. if the court cannot articulate a meaningful limit on the spending power about when the spending power becomes coercive, the logical consequence is not anything goes. the logical consequence is to reconsider the spending power even more fundamentally. congress can tell the states to do things or induces the states to do things that it could not direct them to do directly. congress gave states money in order to change their drinking age even though everyone knew congress could not order them to change their drinking age. there are lots of things the cannotl government can simp

simply order the state to do. they have to have an inducement to do that. if there is no way to tell where the line is in forcible, the logical consequence is to say congress cannot do things on their spending power unless it can do them directly. i think it was very important that the court articulated that limit. the last way it is important is the sense that there is not this precedence out there. it is hard to argue the spending power argument when the only thing you have to -- when you have a holding of the supreme court, and certainly there is going to be much discussion about medicaid lend itself to arguments, but there is now

president of the supreme court that says at a certain point the inducement of states is simply to coercive to the constitutional. i think that is quite significant. i really don't think we had a constitutional moment in october 2011 but we almost did. if those who had predicted an 8- 1 landslide, then we would have had a very significant constitutional moment. thank you. [applause] >> thank you very much. we have time for a few quick questions and quick answers before we have our reception. if you could raise your hand and identify yourself, that would be good. let's start right here. the microphone is there.

>> paul, would you care to comment or speculate on the question -- was there a different vote during conference that was switched by the chief justice? >> it is great to see you. i will be happy to give a very limited comment on that. i have no special sources on the inside. i am a big believer that efforts to try to parse footnotes and opinions and figure out whether a reference to some earlier opinion was a reference to a prior majority -- i think all of that is not time well spent. what i can say is it was not apparent from the argument that the taxing power was a chief focus of the chief justice or

any other justice. that is something that is unfortunate because there was much discussion of the commerce power and much discussion of the necessary and proper power. there was really maybe a minute or two on the taxing power. the taxing power argument took on greater significance as the case went through its internal deliberations. >> this morning, i spoke about the medicaid issue on the first panel and i gave the equal weight to the coercion argument and the clear notice argument. i noticed that the notice argument was not part of your presentation. i would like you to get to comment on that part of the case

as well. >> i think both parts of the opinion are important. there was probably an easier task for the lead again to to cite court cases with clear notice requirements. what the aspect of this decision that is a real game changer is the fact that we now have something more than victim to cite when it comes to coercion. . point. the court has made clear that notice remains a very important principle. the notice aspect of the case will be harder to distinguish. as i said, i do think it is very important to have a president to build on. i don't think that the

government will ultimately be successful in cabineting this case for only medicated. to have another precedent that is very helpful on that point is quite significant. >> a question right up there. >> the question is, do you think there is anything that you could have added somewhere along the line in the argument that would have been in roberts had that would have come to have him come with a different decision? >> well, i guess what i would say is you can think back with the benefit of this opinion and say if only i started my argument with the taxing power. [laughter] on the other hand, if i had done that, i think my clients would

have and immediately fired me because i don think the people saw that -- it is not the way that the lower courts relied on that theory. there was some briefing on it. i guess the one thing that i might -- in a perfect world, i think if the taxing power issue took on such additional significance after argument, i think there was a real argument suggested that the court should have held the case over and asked for separate briefings. and the very important question about whether or not it is an impermissible ask tax. i filed two briefs in the case that i believe is very important, but if i had to choose i think i would have said

the affordable care act was even more important. if i could have voted, i would say why couldn't you do it with that one? i do think it is a much more important issue than people give it credit for. it is very easy to think of the taxing power as -- if you really read the debate, it becomes very clear that the requirement on the direct taxing power was a central federalism provision and was the idea that the federal government is not just going to be able to go around the states on direct taxes, that they are going to have to have the state do it or be among the states. whatever your views about the 16th amendment which overcame a

supreme court decision limiting the federal government's ability to impose a direct tax on income -- the 16th amendment had a remarkable effect on the balance between the federal government and the state governments. i say that to illustrate how central the direct tax question is to our structure. >> you have said that this was not a constitutional moment because there is a limit on the commerce power. how is that in the different from saying that there is no limit on the taxing power other than when it becomes coercive? if you can do the same thing under the taxing power, that you could do under the commerce

power, we still have a centrally an unlimited power, don't we? >> if there is a weakness in my submission, that is the weakness. but i think it is not without a response. the response is there are differences and i think they are practical and theoretical, and structural. >> it is the constitutional that concerns me. >> i would say -- i do will address it but what i would call the structural differences to the extent in which congress can be expected to play a role in limiting taxation. i think that is awfully significant. i do not want to pass over that. expecting congress to impose self restraint with its commerce power is kind of like asking the

proverbial fox to guard the henhouse. the reason is different is because nothing to excite the populace more than the idea that they are going to raise taxes. i do think -- i do not know if there will ever be a working majority in congress to exercise self constrained with the commerce power. we probably right now do have a working majority to not impose new taxes, certainly in the house. the theoretical difference is that once you have the commerce power, then you can do anything to essentially enforce the mandate to purchase insurance. you could make it a condition of entering any federal license.

health insurance could be a condition for getting a student loan or anything like that. they also could impose substantial additional penalties. in theory, they could jail u. it is not limited to just imposing tax exactions where and under the taxing power that is what they get to do. the limits are real and would be enforceable. the one thing they could not do which i think for some taxpayers come close to doing is saying you have a choice to either buy health insurance or pay a tax in the amount of your premium. i think the opinion suggests congress could not do that but we may need a case to the gate. [laughter] >> right back there in the

middle of the row. >> i find very persuasive all the things you're saying but i would like to play the devil's advocate. that is against the propriety of treating the affordable care act tax as an indirect permissible tax by an analogy to the hamiltons' carry tack. activity that creates- externalities' merits intervention. an 18th-century carriage would do more damage to roads than an average pedestrian, so you impose a tax that forces the owner to be taxed. i can see the appeal of treating the mandate more as or more like a tax on people not buying carriages, but i think it is

important to remember that not owning a carriage does not impose costs on society. why not buying health insurance does. what is the fundamental difference between action and inaction customer i can imagine, injuring one. >> here is the thing. i took a year of economics before i went to law school. i am just not sure that i could not take issue with the premise -- i think you could describe some externalities' to any inaction. if people use their carriages to give people rides gratuitously, then at not having a carriage is selfish and you are imposing costs on other people. it looks and a lot like not having health insurance. one way of wrestling with that objection is i am just not sure

-- first of all, i am not sure of a clear distinction. most have some externalities'. i also think it is not clear to me that the distinction is not actually a pretty good proxy for the direct tax. whenever economic sense it may be, but their relative question is whether it is a direct or indirect tax. i think it is easier to articulate a tax on a carriage not being a tax on you but the purchase of your carriage. i think it makes it much harder to make that argument on having a theoretical tax not on the carriage. you can quibble and heaven knows the government and others who have debated about this have about this distinction. i