Obama, the Supreme Court and the "T-word"

WASHINGTON Thu Jun 28, 2012 3:25pm EDT

WASHINGTON (Reuters) - President Barack Obama and fellow Democrats took great pains to avoid the word "tax" when they pushed through Congress a sweeping U.S. healthcare overhaul that would require most Americans to buy insurance and would fine them for failing to do so.

Instead they called it a "penalty" and the 2010 law itself used the same term. They wanted to avoid the highly unpopular and politically charged "T-word" that could have sunk the law's prospects in Congress.

The Obama administration even went so far as to avoid making the power-to-tax argument the main one for advancing the law in March when it argued the case before the nine justices of the Supreme Court.

Instead it highlighted another power in the U.S. Constitution - the federal government's authority to regulate interstate commerce.

In the end, it was the tax argument that saved the law. Chief Justice John Roberts, a conservative, joined with the four liberals on the Supreme Court to issue a narrow majority ruling upholding the healthcare law.

The law's "requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax," Roberts wrote for the court's 5-4 majority.

"Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness," he wrote, joined by justices Ruth Bader Ginsburg, Stephen Breyer, Elena Kagan and Sonia Sotomayor.

Sitting directly in front of Roberts as the chief justice announced the opinion on Thursday was U.S. Solicitor General Donald Verrilli, the man who had argued the government's case for the healthcare law.

Soon it became clear that Verrilli had won the day - with what had been a secondary argument. Roberts accepted the Obama administration's view that the penalty for not buying insurance is not called a "tax," but effectively operates that way.

Roberts wrote in the decision that in the end it did not matter whether the law called it a penalty. "That label cannot control whether the payment is a tax for purposes of the Constitution," he wrote.

The label will certainly factor in the run-up to the November 6 election.

Taxes will be a central campaign theme for Obama's Republican opponents, and his Republican rival for the job, Mitt Romney, quickly seized on the issue saying: "Obamacare raises taxes on the American people by approximately $500 billion."

Other Republicans portrayed the president's selling of the healthcare law as a deception.

"The president of the United States himself promised up and down that this bill was not a tax," Senate Republican Leader Mitch McConnell said in a Senate speech minutes after the Supreme Court ruled.

"This was one of the Democrats' top selling points - because they knew it would have never passed if they said it was. The Supreme Court has spoken. This law is a tax," he said.

(Additional reporting by Andrew Longstreth in New York; Writing by Howard Goller; Editing by Will Dunham)

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