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"The 1934 Dinner Party That May Have Helped Save Obamacare."
The 1934 Dinner Party That May Have Helped Save Obamacare
When FDR created Social Security, his labor secretary feared the court would reject it—until a justice told her over dinner that framing it as a tax could save it. By Jonathan Alter
Could a 1934 Washington dinner party hold the key to Chief Justice John Roberts’ landmark decision on the Affordable Care Act?
In late 1934, President Franklin D. Roosevelt had been in office more than a year and decided to move forward on what would become his greatest domestic achievement: Social Security. He assigned his secretary of labor, Frances Perkins, the first woman ever to serve in the Cabinet, to lead the way on designing the program.
But Perkins was worried. The Supreme Court was moving toward a narrow interpretation of the Commerce Clause that would invalidate many of the great achievements of the New Deal. Soon that would include the National Recovery Act, the capstone of FDR’s famous First Hundred Days in 1933.
(It would be another four years before Justice Owen Roberts—no relation—would famously switch sides and the Court would begin reversing itself, partly in response to FDR’s 1937 “court packing” scheme.)
Perkins went to dinner at the home of someone lost to history and recalls in her memoirs that she bumped into Justice Harlan Fiske Stone there.
When Perkins expressed worry about whether an old-age and survivors insurance program would pass constitutional muster, Stone, a Republican appointee to the court and future chief justice, replied: “The taxing power of the federal government, my dear; the taxing power is sufficient for everything you want and need.”
Stone’s point was that if Social Security or anything else Perkins might cook up was financed by a tax, it was permissible under the Constitution, especially since the original taxing power had been bolstered by the 1913 adoption of the Sixteenth Amendment, which legalized a federal income tax.
-snip-
Then, as now, there was some sales deception involved. Social Security was sold by FDR as a social insurance program where each employee paid premiums into a personal retirement fund; in truth, it’s financed by a payroll tax and the money collected goes to today’s retirees, not the workers who paid in. Obamacare was sold as being funded by a “mandate”; in truth, it’s like a cigarette tax, as the chief justice wrote, designed not so much to raise revenue as to change behavior.
After the dinner party, Frances Perkins went to FDR and swore him to secrecy on the advance opinion from the court, but Justice Stone’s view gave the Roosevelt administration more confidence as it moved forward with what would become the most popular and successful social program in American history. The Affordable Care Act is the completion of the “cradle to grave” insurance coverage that Roosevelt envisioned when he launched Social Security.
Unless Mitt Romney wins, we will have ended discrimination against sick people in our time—an historic achievement that wouldn’t have been possible without an obscure constitutional argument over taxes.
http://www.thedailybeast.com/articles/2012/07/01/the-1934-dinner-party-that-may-have-helped-save-obamacare.html
When FDR created Social Security, his labor secretary feared the court would reject it—until a justice told her over dinner that framing it as a tax could save it. By Jonathan Alter
Could a 1934 Washington dinner party hold the key to Chief Justice John Roberts’ landmark decision on the Affordable Care Act?
In late 1934, President Franklin D. Roosevelt had been in office more than a year and decided to move forward on what would become his greatest domestic achievement: Social Security. He assigned his secretary of labor, Frances Perkins, the first woman ever to serve in the Cabinet, to lead the way on designing the program.
But Perkins was worried. The Supreme Court was moving toward a narrow interpretation of the Commerce Clause that would invalidate many of the great achievements of the New Deal. Soon that would include the National Recovery Act, the capstone of FDR’s famous First Hundred Days in 1933.
(It would be another four years before Justice Owen Roberts—no relation—would famously switch sides and the Court would begin reversing itself, partly in response to FDR’s 1937 “court packing” scheme.)
Perkins went to dinner at the home of someone lost to history and recalls in her memoirs that she bumped into Justice Harlan Fiske Stone there.
When Perkins expressed worry about whether an old-age and survivors insurance program would pass constitutional muster, Stone, a Republican appointee to the court and future chief justice, replied: “The taxing power of the federal government, my dear; the taxing power is sufficient for everything you want and need.”
Stone’s point was that if Social Security or anything else Perkins might cook up was financed by a tax, it was permissible under the Constitution, especially since the original taxing power had been bolstered by the 1913 adoption of the Sixteenth Amendment, which legalized a federal income tax.
-snip-
Then, as now, there was some sales deception involved. Social Security was sold by FDR as a social insurance program where each employee paid premiums into a personal retirement fund; in truth, it’s financed by a payroll tax and the money collected goes to today’s retirees, not the workers who paid in. Obamacare was sold as being funded by a “mandate”; in truth, it’s like a cigarette tax, as the chief justice wrote, designed not so much to raise revenue as to change behavior.
After the dinner party, Frances Perkins went to FDR and swore him to secrecy on the advance opinion from the court, but Justice Stone’s view gave the Roosevelt administration more confidence as it moved forward with what would become the most popular and successful social program in American history. The Affordable Care Act is the completion of the “cradle to grave” insurance coverage that Roosevelt envisioned when he launched Social Security.
Unless Mitt Romney wins, we will have ended discrimination against sick people in our time—an historic achievement that wouldn’t have been possible without an obscure constitutional argument over taxes.
http://www.thedailybeast.com/articles/2012/07/01/the-1934-dinner-party-that-may-have-helped-save-obamacare.html
13 replies
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This is exactly the case. The almost 80-year precedent is there for Social Security/Medicare to exist as a "tax" (in that instance, a "payroll tax"
. Throwing that out would then invalidate Social Security & Medicare, and could have ramifications of ignoring the 16th Amendment. I.e.
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
And those without income are exempt from the "penalty" provision in the ACA.
For anyone interested, I recommend "The Woman Behind the New Deal The Life and Legacy of Frances Perkins - Social Security, Unemployment Insurance and the Minimum Wage" by Kirstin Downey.
