The Supreme Court has ruled.
Politically, this is an initial win for Obama as President. As a former Constitutional Law Professor, he could have been panned for using all his political capital, causing House Democrats to get massacred last election, all for nothing. Instead, as President he has dodged this bullet.
However, the ruling with regard to not requiring the states to enact the Medicaid provisions or comply with facilitating the individual mandate via the exchanges expose the integrated components of the bill. Suddenly, it may be deemed unworkable. As President, having to administer something potentially too crippled to be workable is a real problem.
But what is the effect for Obama as a candidate?
1) The bill remains highly unpopular with a MAJORITY opposing it and roughly 40% supporting it.
2) The President said this was not a tax and he would not raise taxes on those making less than $250,000. The Supreme Court upheld this as the individual mandate is Constitutional because it IS a tax. There is a definitely going to be a charge from the GOP this was a “bait and switch.”
3) Effect on the economy. Keynes argued the most critical impact on economic growth was the “animal spirits,” a belief by the entrepreneur on whether the future will be better or not. If they think the future is dire, they become hoarders. If they think it is bright, they invest. I posit this will dampen future confidence in the economy and performance. The race is a dead-heat. Any deterioration may be terminal for candidate Obama. Update #1: Market drops 100 points in 30 minutes
4) I go back to point #1. In 2010, the biggest factor that led to the GOP taking over the House was Obamacare. I always believed that a blanket ruling against Obamacare was a net boost to Obama. People could support other aspects of the Obama agenda depending the Supreme Court to “represent” their views on Obamacare. Now that is not the case.
5) Final comment. The essence of the ruling is there is no limit to Congress’ ability to tax Americans based on what they choose or not to do. This will and should re-invigorate the Tea Party mentality. Elections matter. The Constitution provides limited protections to civil liberties and choices. In the end, the first line of defense is clearly our elected members of Congress and the President. Update #2: Taxing people has always got a more visceral electoral response than regulating people. This ruling clearly expands taxing authority and restricts authority to regulate.
Sidebar: The Medicaid ruling has broad ramifications. If the federal government can’t take away Medicaid funds if states don’t change their Medicaid eligibility rules, can they take away highway funds if state’s change the age of drinking? More broadly, this has potential of changing the relationship between the state and federal governments. It can have the effect of lessening federal power because they appear to have lost the power of the purse in forcing state governments to do federal bidding. It also has the potential of making the federal government much stronger as their only mechanism of “social engineering” is to do it exclusively from the federal level bypassing the states.
Update #3: Obama stresses components which the GOP agrees with (eg pre-existing conditions). He avoids the new tax about to be imposed on Americans. He avoids the declaration of the Medicaid provision which makes this bill unworkable. Like Romney, I suspect he had two speeches prepared depending on the results. I don’t think he contemplated these two things.
Update #4: Signal to watch: Next Obamacare polling numbers. If it grows more popular/opposition falls below those who disapprove of Obama’s job rating, Obama got a net gain. If it grows more unpopular, he got a net loss. Furthermore, if the President’s numbers fall, it worked against him. If converse is true, it worked for him. In what promises to be an extremely tight election, this may be the decider.