• This is a rush transcript from "The Journal Editorial Report," December 18, 2010. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," Obama-care legal challenges gain steam. A Virginia court rules against the individual mandate as another suit advances in Florida. We'll talk to the lead attorney in that case.

    Plus, call it a pre-Christmas miracle. The House passes the tax cut deal and Harry Reid is forced to pull his omnibus spending monster in the face of certain defeat. Could things really be changing in Washington?

    And governors wage war on public-sector unions as bloated pay, pensions, and benefits threaten to bankrupt struggling states.

    Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    Obama-care suffered a major setback this week when a Virginia court ruled that the law's lynchpin, that the Americans purchase insurance, or pay a penalty, is unconstitutional. A federal district court judge, Henry Hudson, declared that the so-called individual mandate exceeds the authority granted to Congress under the Commerce Clause. The Virginia ruling the same week as another legal challenge gets underway in Florida. More than 20 state attorneys general are suing in federal court there, where oral arguments were heard on Thursday.

    Attorney David Rivkin is the legal counsel in that suit and he joins me now.

    David Rivkin, welcome back to the program. Very good to have you here.

    DAVID RIVKIN, LEAD COUNSEL, FLORIDA HEALTH CARE SUIT: A pleasure.

    GIGOT: Lets' talk about the Virginia case first. How significant is it from your point of view that a judge struck down the individual mandate?

    RIVKIN: It's very significant. It's a good opinion. And it certainly demonstrates that more than one federal court finds heart of this law, the individual mandate, to be constitutionally objectionable. There are issues and opinion that it's not as broad as we would have liked, namely, it only, Paul, strikes down the individual mandate and not the rest of the statute. And it does not provide for injunctive relief. It basically provides for declaratory judgment that the act is unconstitutional. But it's a good start.

    GIGOT: You think this guarantees that the case will eventually end up at the Supreme Court?

    RIVKIN: Absolutely. I believe that our case will end up before the Supreme Court and so will Virginia's case. The question is when and in what context.

    GIGOT: All right. One of the issues here was whether or not the government can legislate for inactivity, that is for doing nothing, for not buying insurance. Is this the core of the case in dispute in your view?

    RIVKIN: It is, and it's very important to underscore, Paul. This is beyond the health care. The fundamental question is this, can the federal government exercise general police power, namely, take individuals not engaged in commerce or engaged in economic activities and compel them to do so. This is quintessentially a police power, that's what states can do.

    (CROSSTALK)

    GIGOT: Under the Constitution — under the Constitution, the states have that —

    RIVKIN: — transformed our constitutional architecture. We have given the federal government the power that only the state can have. And in the process, we harmed individual liberty. Remember, the reason state sovereignty matters is not just for the sake of the state, the framers wanted to diffuse power, both vertically between the federal government and the states as well as horizontally among different branches of the federal government, to prevent the concentration of power in any one set of hands. And that's really the heart of our constitutional architecture.

    GIGOT: OK. But the government argues, look, everybody gets sick eventually and everybody needs medical care eventually. and since the federal government pays for an awful lot of that care, particularly through Medicare and other public programs, that, in essence, not buying insurance is a form of economic activities. You're putting the burden on others. And you're just not agreeing to pay in yourself. What's your response to that argument?

    RIVKIN: We got into it heavily in the hearing yesterday, earlier stages of our cases. It's a totally specious argument. The government is basically saying, because you, in the future, may do something that imposes a burden on others — OK, they call it cost shifting — because of that, the government can require you to buy insurance to do that. First of all, that problem is endemic, the possibility of cost shifting, Paul, across all market segments. Look at the subprime mortgage. Look at the fact that over $70 billion worth of credit card bills don't get paid every year.