The Thinker: Rich Galen


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Mullings by Rich Galen
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Jobs, Taxes & Penalties

Rich Galen

Friday July 6, 2012


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  • The jobs number this morning was, to say the least, disappointing. According to the Bureau of Labor Statistics the unemployment rate remained at 8.2% but the economy added only about 80,000 jobs - far below the "whisper number" which was north of 110,000 - and farther below the number needed to bring the unemployment rate down.

  • The Inside-the-Beltway chatter all week (not counting the required "Do you have power?" question) has been whether the health care mandate is a "tax" or a "penalty."

  • Earlier in the week the senior advisor to the campaign of Gov. Mitt Romney said Romney believed it was a penalty, not a tax - even though that was how Chief Justice John Roberts had carved an opinion sustaining the Affordable Care Act.

  • Later in the week the campaign pivoted with Romney saying it was a tax.

  • CNN was in a projectile sweat about this all week.

  • On Wednesday, appearing with Mullfave Donna Brazile, I tried to explain to Wolf Blitzer that the way to think about it was like light. You know � light?

  • Depending upon how you look at it and where you are when you're looking at it light can be either a wave or a particle.

  • I said this was the same thing: At the federal level the mandate was adjudged to have been an Unconstitutional expansion of the Commerce Clause on the part of the Congress, but fell within the Congress' taxing powers.

  • So, at the federal level the mandate is a tax.

  • But, in states - of which the Commonwealth of Massachusetts is one - there is no such thing as a "Commerce Clause" because states have no power to impose trade restrictions on one another. Thus there can be no Unconstitutional expansion of Massachusetts' Commerce Clause because it doesn't exist.

  • So, at the state level the mandate can be a penalty.

  • Thursday, Brazile and I reprised our appearance with Blitzer and we were discussing the Wall Street Journal editorial that ripped Romney for not being clear that the mandate is not just a tax, but a really, really big tax.

  • I said that for most people, it really didn't matter. For most Americans it is the working definition of "a difference without a distinction."

  • Wolf, properly, said it was important because as a tax it can be altered with only a majority vote in the U.S. Senate (under a process called "reconciliation") not the 60 votes normally needed to pass anything.

  • But we all fell into the trap of talking about issues in Washington-speak - a language all but unknown in America outside the Beltway or major academic institutions.

  • For a man or woman trying to decide whether to expand their small business and add a few employees in suburban Omaha, or rural Ohio, whether the mandate is a tax or a penalty is of absolutely no moment.

  • How much Obamacare will cost them - something they're probably still trying to determine - is all that matters.

  • An engineering shop in Omaha and a small manufacturer in Ohio will not alter the unemployment figures. But 10,000 small businesses deciding to hire two or three people will. And they're not going to do it because in small towns not hiring someone you're not certain you can keep on the payroll is far less painful than having to lay someone off after a few months.

  • This is pressing on the Obama campaign. The Romney campaign appears to be far out-raising Obama and not just in the SuperPAC column, but in the campaign and Republican National Committee column - those are the organizations one which limits remain and names are reported.

  • This tells us that the economy having a serious effect on enthusiasm for the Obama campaign especially among younger voters for whom finding a job has become a 50-50 proposition.

  • After 1,263 days of the Obama Administration Americans are weary of "Blame it on Bush" as an economic policy.

  • It is now very unlikely that the unemployment rate will drop below 8% before the November elections.

  • Whether the mandate is a tax or a penalty is a fun conversation to have on the set of CNN or MSNBC; but in Nebraska, Ohio, and the rest of the country, low job creation is raising the bar for an Obama re-election.

  • On the Secret Decoder Ring today: Links to the AP's analysis of the jobs numbers, to the WSJ editorial, and to the polling summary. Also a Mullfoto and a Catchy Caption of the Day.

    -- END --

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