• With: Joe Rago, Dan Henninger, Dorothy Rabinowitz, James Taranto

    This is a rush transcript from "Journal Editorial Report," June 30, 2012. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST: This week on the "Journal Editorial Report," a Supreme Court stunner as Chief Justice John Robert joins the liberal wing in upholding the health care mandate. We will look at the legal arguments, is it really a tax? The political implications, who benefits come November and the economic fallout, what it means for the health insurance industry and your bottom line.

    Welcome to the "Journal Editorial Report," I am Paul Gigot. Well so much for that radical right-wing Supreme Court, Chief Justice John Roberts joining the four liberal members voting to uphold the core of President Obama's health care law this week saying the controversial individual mandate is constitutional, not under the Commerce clause but as a tax.

    Our panel is here with complete coverage of the legal arguments behind the decision and the political implications for November and beyond. I am joined by Wall Street Journal Columnist and Deputy Editor Dan Henninger, Editorial Board Member Joe Rego and Editorial Board Member Dorothy Rabinowitz and Opinioneditor.com Editor James Taranto.

    So James, while all of us were spending months debating the commerce clause, John Roberts slipped us a Mickey and upheld the health care law on the tax provision. What do you make of the argument?

    JAMES TARANTO, THE WALL STREET JOURNAL: Well, we can all think of Supreme Court cases where the court has reached the right result but done so with bad legal reasoning, bad constitutional reasoning. In a way, this case is sort of the opposite, because what we got from the Court, and by that I mean Chief Justice Roberts, who was in a position to decide this thing unilaterally was, a really good exposition on the commerce clause, which was the central constitutional argument, and then a lot of really labored statutory interpretation to somehow turn this into a tax. In the bill that passed the Senate, there was actually a list of new taxes that ObamaCare contained, this wasn't in it.

    GIGOT: The mandate tax wasn't in it. Joe, what do you think of the persuasiveness of the tax argument per se, on a constitutional basis?

    JOE RAGO, THE WALL STREET JOURNAL: Well, one problem, as James said, they didn't structure it as a tax--

    GIGOT: They called it a penalty.

    RAGO: So Chief Justice Roberts had to essentially re-write the law to come to this result. The larger problem is, that whatever concessions they made on the commerce clause, if you can say well, you can do the exact same thing with the tax, it is a huge loophole in terms of limiting Congress's power.

    GIGOT: That is right, they are saying under the commerce clause, a mandate is unconstitutional unless Congress decides to assess a penalty on that mandate and call it a tax, or even not a tax, the judges can interpret it as a tax and therefore, it is constitutional. So that would seem to essentially eviscerate any limits that they have imposed here on the commerce clause.

    DANIEL HENNINGER, THE WALL STREET JOURNAL: I would say so, Paul. I mean, there is much about this opinion by John Roberts, as we said in our editorial, usually it is a 5-4 opinion and this is a 1-4-4 opinion. The chief justice writing the whole thing, and basically re-writing the statute, as James was suggesting, that mandate tax was not in the statute. He basically has had to re-write the statute to arrive at this decision and the question is, why did he do that, why did he pull out an argument that basically no one virtually had not been made in the oral arguments before the Court.

    GIGOT: Answer that question, Dan, why do you think he did it?

    HENNINGER: I think because he was intimidated by the idea that if after Citizens United which the left had described as a purely political decision, he went five-four with the majority that the left was going to attack and try to delegitimize the Court, and the idea here is that Justice Roberts is protecting the integrity of the Court.

    GIGOT: Dorothy, what about the argument we have read both on the left and some on the right saying this is actually an act of genius on the part of Justice Roberts. He is playing chess because he put limits on the Constitution in the long run, and the commerce clause, but in the short run you have to accept ObamaCare, but that is worth the price.

    DOROTHY RABINOWITZ, THE WALL STREET JOURNAL: Yes, I have heard nothing, but it was the only amusing thing, the most monumental farrago of rationalizations for what was essentially, the justice caved before the threat of what Dan just said.

    GIGOT: So you think it was the intimidation by the press--

    RABINOWITZ: Yes, I think it was quite clear--

    GIGOT: And the politicians.

    RABINOWITZ: Yes. He was covered by the most extraordinary explanations, for example, what was it they said, he was burnishing the stability of the status of the Court which was his to keep so that it wouldn't look like a political instrument. Well we should ask then, is it the business of the Chief Justice to worry about burnishing his Court's credentials rather than doing justice and providing a sane and rational and not extraordinarily bizarre piece of reasoning?

    GIGOT: James?

    TARANTO: Whether this strategy he has adopted is genius or too clever by half only time will tell. Let's get together in 20 years and look back. But I will say, he was very good on the commerce clause. Let me read you a passage. Quote, "The commerce clause is not a general license to regulate an individual from cradle to grave simply because he will predictably engage in indictable transactions. That decisively strikes down the argument that the left had taken for granted for decades."

    GIGOT: But the price of that is expanding the taxing power.

    TARANTO: I am not sure how much the taxing power has expanded here. There are lots of taxes that can be influenced by individual behavior. Even if one says okay this goes too far, you can't impose a tax in order to, in effect, force people to do something, they could have done it through a tax credit.

    GIGOT: They could have done that but they didn't, and you are only supposed to be able to apply taxes on behalf of methods that are constitutional. In this case he said the mandate is unconstitutional but we can apply a tax on it and therefore make it constitutional. That seems to me to be an expansion of the taxing power and one that will be very hard to limit in the future.

    HENNINGER: Yes, I think future congresses will take the basis for his reasoning to impose taxes for other purposes, let's say in the area of the environment, it will be litigated and liberal justices will cite Justice Roberts' interpretation of the taxing power to support those legislations.

    GIGOT: Joe, there was one other limitation on the Congress that was part of this opinion and that was on Medicaid, giving an opt-out provision for the states. Is this potentially a limitation on federal power going forward?

    RABO: They said the federal government can attach conditions to funds, they can't coerce the states, they can't commandeer their resources. That is a step forward, it is the first time in history the Court has limited the spending power. It is a significant seven to two win but in practical terms, I am not sure how far this goes.

    GIGOT: James, what do you think of the argument that we have heard from some people that John Roberts may have changed his mind in making this -- first he sided with the conservatives trying to overturn all or part of it and then under pressure, changed to his 1-4-4 opinion.

    TARANTO: I have no sources close enough to give direct knowledge, but the clue I found in the case was, if you read Justice Ginsburg's concurrence, it is full of snarky references to the Chief Justice, it is written like a dissent, and a bitter dissent. And the dissent is signed by all of them jointly which is very unusual so that suggests that something happened at the end there.

    HENNINGER: --The fly by night briefing of the majority opinion, which is really signaling that Justice Roberts at the last, James, was suggesting on the commerce clause, was very strong, thoughtful material, this was just made up at the last minute.

    GIGOT: Looks to me like he was looking -- Justice Roberts was looking for a reason to uphold this bill and he found it.

    RABINOWITZ: That's right. One of the most disturbing things about this besides the result of this judgment is the fact that you could have intimidated, very good chance, the justice and you could have found a way to explain and exculpate this with the most bizarre sorts of excuses.

    GIGOT: Thank you Dorothy.

    When we come back, what now as both sides spin the Supreme Court's decision. ObamaCare's future is in the hands of American voters. Will Democrats pay at the polls for this new middle class tax and can Republicans get it overturned?

    (COMMERCIAL)

    (BEGIN VIDEO CLIP)

    PRESIDENT BARACK OBAMA: Whatever the politics, today's decision was a victory for people all over this country, whose lives will be more secure because of this law and the Supreme Court's decision to uphold it.

    (END VIDEO CLIP)