Health care law heads to Supreme Court

This is a rush transcript from "Journal Editorial Report," March 24, 2012. This copy may not be in its final form and may be updated.

PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," Obamacare heads to the Supreme Court with oral arguments in the historic case set to begin on Monday. We'll talk to the lead attorney in the lower court challenge.

Plus, our panel looks at the odds that it will be overturned, and what the justices' decision could mean for the 2012 election.

All that, and Paul Ryan's new budget. He's back and he's taking on tax and entitlement reform once again. Will he live to tell about it this time?

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

The Supreme Court on Monday is set to begin hearing an historic three days of oral arguments on the Constitutionality of President Obama's signature legislative achievement, the Patient Protection and Affordable Care Act. Central to the issues before the court the individual mandate, requiring most individuals to buy health insurance by 2014 or pay a penalty.

26 states challenged that provision, and attorney, David Rivkin, represented those states in the trial and appellate courts. He joins me now.

David Rivkin, welcome.

You were the guy who started it all with your op-ed, I'm happy to say, in the Wall Street Journal in 2009 in the lower court case. So what are you going be to be looking for when you listen to the justices next week?

DAVID RIVKIN, CONSTITUTIONAL ATTORNEY: Well, I'm going to be looking for a spirited questioning which, of course, would come, Paul. But I'll also be looking for indications, particularly from Justices Kennedy and Scalia, that they appreciate what this case is all about.

This case is all about, as you mentioned in your excellent editorial, it's about the key Constitutional architecture that is designed to protect individual liberty, and that's the dual sovereignty system, which diffuses power between the federal government and the states, and emphatically withholds from the federal government the general police powers to regulate individuals merely because they exist.

GIGOT: OK, but the people -- the administration says, look, the Commerce Clause of the Constitution gives Congress the right to regulate commerce. Health care is commerce. So why is this case different than other regulation of commerce cases?

RIVKIN: The reason for it, Paul, is because the Commerce Clause, while very broad, is not infinitely capacious. It's one of Congress's limited enumerated powers. It allows them to regulate things and activities, actions, physical objects, and it allows individuals to be pulled into this regulatory vortex, only to the extent as and in so far as they participate in those activities or interact with things. What Congress is doing here, they're regulating individuals simply because they exist.

For example, Congress could have said, you cannot obtain any health care services in this country unless you have insurance. That is regulated conditions of purchasing health care that Congress cannot do. What Congress cannot do without regulating you as individuals, which is prohibited by the Constitution, to say because you might in the future use health care services or because of your failure to buy insurance results in a failure to cross-subsidize somebody else, because the --


GIGOT: Right.

RIVKIN: -- can regulate you here and now.

GIGOT: OK, so that comes down -- the core of it comes down, in your view, to the individual mandate. But some of the liberal defenders of the Obamacare legislation say, look, if you're going to overturn this, you've got to overturn all of the New Deal precedents or the major New Deal precedents on the Commerce Clause, and that's something that no conservative court should do, because it's just too radical. What's your response to that?

RIVKIN: This is nonsense. This is classical misdirection. Our case is the individual mandate. It's consistent with the entirety of the Commerce Clause jurisprudence, including the New Deal cases, like Wickard v. Filburn, and the most recent major Commerce Clause cases like Risch. All of those cases have one common thread running through them. You can regulate in a very broad fashion, activities, interstate or intrastate. You can regulate objects. You can regulate instrumentalities. None of them allow the regulation of people and such. And very importantly, Paul, in every single one of those cases, the court acknowledges that there has to be a meaningful, judicially enforceable limiting principle that distinguishes between the exercise after Commerce Clause and prohibitive exercise of a plenary (ph) police power, which is the power to regulating individuals, which only states can do.

GIGOT: OK, you live in Washington. And I'm sure you've heard the scuttlebutt that even among some conservatives that this could go 7-2 the other way, with Chief Justice Roberts taking some of the conservatives and upholding the individual mandate because, on the grounds that, look, no Supreme Court should intervene in a such a fundamentally political manner as legislation on health care. What do you think of that talk?

RIVKIN: I've heard the same talk. I think it's utterly wrong. I would make two observations. First of all, it's very important not to misunderstand what judicial deference is. Judicial deference to the exercise of congressional authority is very real. We, as conservatives, agree with it. But when legislation exceeds congress' Constitutional authorities it is not only right, it is emphatically the duty of a court to strike it down. And I'm sure that all the justices can appreciate that.

Second, it would not be 2-7, I can promise that much.


And I am extremely hopeful that not only that the chief justice and justices commonly referred to as conservatives -- I'm very hopeful that Justice Kennedy, who is the most distinctive fearless voice in the court now, whose language in cases like Lopez and Bond, which is the most recent case from last term that deals with (INAUDIBLE) issues -- this is something -- he is the one who referred to this duel summary (ph) system, which I mentioned earlier, as the most distinctive feature of American constitutionalism. He's absolutely right. We have -- this is something that is unique to this country, this additional way of protecting liberty by having the diffusion of power between the federal and the state government.


RIVKIN: So it's not going to be 2-7.

GIGOT: All right. What you're saying is we're all going to be watching very closely Justice Anthony Kennedy, as we do in so many cases.

David Rivkin, thanks for being here.

When we come back, will they or won't they? Our panel looks at the odds the justices will overturn Obamacare, and what it would mean for the president's reelection campaign.


GIGOT: Yesterday was the two-year anniversary of the signing of President Obama's health care law, an occasion marked by the White House with very little fanfare. But with the Supreme Court's ruling expected in June, the issue is sure to take center stage in the presidential campaign.

Here to handicap the justices' decision and discuss the potential political fallout, Wall Street Journal columnist and deputy editor, Dan Henninger; editorial board member, Joe Rago; and editor, James Taranto.

Joe, you've been following this from the beginning. How big a moment, constitutionally, politically, is this?

JOE RAGO, EDITORIAL BOARD MEMBER: It's history-making, Paul. For the last two years, everyone's been saying, oh, this is ridiculous, you know, the government is limited in enumerated powers. Is --


GIGOT: Which is in the Constitution.

RAGO: Right. It's a quaint artifact of the 18th century. Now the court is saying, well, hang on a second, maybe the critics had a point all along.

GIGOT: This is the longest oral argument in almost half a century.

RAGO: Almost a half century. That's right.


OK, James, how do you read the court on this?

JAMES TARANTO, OPINIONJOURNAL.COM EDITOR: You mentioned this theory that it's going to be an overwhelming ruling, 7-2, so --

GIGOT: More than a theory. There are serious conservative jurists in Washington, who I've known for years, who think that's the way it's going to go.

TARANTO: Sure, but it's still speculation. They don't know.

GIGOT: Of course. Of course.

TARANTO: The argument is that the court doesn't want a 5-4 ruling that will be politically -- that will politically upset people and so forth. I'm skeptical of this speculation. First of all, this -- a ruling upholding Obamacare would actually be a very radical ruling. It would establish a principle that, as Linda Greenhouse, of The New York Times, puts it, Congress can, quote, "Basically do whatever it wants." It would wipe out any limits on, like, the government.

GIGOT: Make the states basically agents on almost all issues of the federal government?

TARANTO: Right. And allow the federal government to order individuals to do whatever they want, whatever Congress wants, whatever Nancy Pelosi, if she's the speaker again, wants us to do. It's really -- so the idea that they would do this for political reasons, when the law in question is widely hated politically -- there was a USA Today poll that found that three-quarters of Americans thinks the court should overturn -- should strike down the individual mandate. I find that hard to believe. It makes sense only if you assume that the court is politically minded and that the court is -- the politics the court is thinking of are the politics of the liberal elite.

GIGOT: So whatever the court decides is going to upset somebody. It's going to have political -- it's going to have ramifications either way.

TARANTO: The only way the court can avoid a politicized decision is if it invokes 1793 Anti-Injunction Act and says the constitutional issues are not yet right for litigation.


GIGOT: One of the things they are considering. But that would --


GIGOT: -- would just kick the can down the road because they would presumably have to take up the case at some point when somebody who, they said, thought had standing could sue.



DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: You know, Paul, I think James has pretty much put his finger on it. If they affirm Obamacare, it will say, once and for all, that pretty much as Linda Greenhouse is suggesting, Congress has complete unfettered authority under our system of government. No one would argue that that's what the founding fathers intended. The left might argue that's where we are now. But if they're going to say that, I'm going to say that the day that happens in the Supreme Court, this country turns into France.


HENNINGER: Because we'll have a strongly centralized government, like France has, unlike the United States. And it's just -- it would be so detrimental to --


GIGOT: But, Joe, some conservatives would argue that, well, we blew through that and the New Deal. That's over. Forget about it. And so you can't go revisit that, even the conservative nostalgics.

RAGO: Sure, but that's -- I mean, that's the issue in this case. And the conservatives who say, well, you know, Congress passed it, and we need to have respect for the democratic process, you know, as David was mentioning, that's true, except when it's such a clear violation of the Constitution's language and instruction.

GIGOT: What would it mean for the law, James, going forward? I mean, for the Obamacare law, if they overturned the individual mandate?

TARANTO: Well, it depends on another question called severability. This is the question of whether, if Obama -- if the individual mandate is unconstitutional, the rest of the law stands or falls. One judge said the whole law has to be wiped out.


GIGOT: This is one appellate judge.

TARANTO: No, it's a trial judge in Florida.


TARANTO: The appellate court overturned him on that -- on that --

GIGOT: Right.

TARANTO: -- subject, but struck down the mandate. So if they say it's not severable, the whole law goes. It's more likely that they'll say it is severable and therefore we're stuck with the rest of the law.

Which interestingly, I think, would be, as a matter of politics, the optimum outcome for the Democrats, for President Obama, as he seeks reelection, because there will be a false sense of this problem has gone away now when, in fact, we still have this law, which has many horrible features other than the individual mandate.

HENNINGER: But one that becomes instantly unbelievable expensive. The mandate is the financing mechanism.


HENNINGER: If you take that away, what's going to pay for the rest of Obamacare? The only answer would be to raise taxes. Politically, it puts the president in a very, very difficult position.

RAGO: Yes, I think you're going to see the law deferred for a year, two years, if it gets struck down. And on the politics, think about this. President Obama ran against the individual mandate. And now he's supporting it --


RAGO: And Mitt Romney is now running against the individual mandate, but implemented it in Massachusetts. So it's a really weird political issue.

GIGOT: But the blow he politically to the president, if his Supreme Court overturns, at least even part of this signature achievement, would be -- so-called achievement, would be, I think, a very big deal in the presidential race.

Still ahead, he's back! Paul Ryan unveils the new Republican budget and takes on PACs and entitlement reform once again. But with critics attacking from the left and the right, can he and his plan survive the political fight?


GIGOT: House Budget Chairman Paul Ryan unveiled a budget blueprint for 2013 this week that includes sweeping changes to the nation's tax code. The Republican plan calls for collapsing today's six tax rates to only two, 25 and 10 percent, and lowering the corporate rate to 25 percent. Ryan tackles the controversial issue of entitlement reform as well, pushing, as he did last year, for an overhaul of Medicare and Medicaid. And, once again, his critics are on the attack.


REP. CHRIS VAN HOLLEN, D-MD., HOUSE BUDGET COMMITTEE: The Republican budget is a prescription for economic decline, and for shredding the social safety net.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: What we see in this proposal is, again, much like its predecessor, essentially, a shift of money from the middle class, seniors, and lower-income Americans, disabled Americans, to the wealthiest Americans, to the wealthiest among us.


GIGOT: We're back with Dan Henninger and Joe Rago. And Wall Street Journal editorial board member, Mary Kissel, also joins the panel.

So you saw that Democratic criticism.



GIGOT: Very nuanced. Paul Ryan was supposed to have committed political suicide last year for offering these proposals. He's back again, modified in some form. But can you commit suicide twice?

KISSEL: No, you can't.


He's still standing, Paul. This is what you call political leadership. And he is making some achievements. He's picking up some Democrats, Oregon Democrats, Ron Widen, for example, and explaining to the American people and that's gaining some supporters. Look, with this Congress and this White House, he's going to have a lot of critics. And this is what political leadership is about. This is the kind of leadership that --


GIGOT: It's not going to become law this year.


GIGOT: But you're seeing a framing of the differences --

KISSEL: Absolutely.

GIGOT: -- between the two parties.

Dan, the president and the Democrats clearly think that they can make this work for them, getting back the majority in the House even in 2012.

HENNINGER: Well, they think they can do it clearly by demagoguing Medicare, throwing granny off the cliff. The idea is that people like Medicare and, indeed, many elderly people do. But what Ryan understands is a choice has to be made, and if you're going to let Medicare keep going as it is, you're going to end up with a different kind of country, one in which people work and pay taxes merely to support the entitlement system, which is the system you have in France. And France now has a growth rate which is not big enough to sustain its commitments. and the euro crisis is the manifestation of that. And Paul Ryan is trying to explain to people why we don't want to go there.

GIGOT: Right, but democracies are notoriously wary of doing anything until it's an absolute crisis. Look at Greece. That's what he's saying, let's avoid the Greece crisis by doing something in advance.

How much has he changed the political debate over the last year? Mary mentioned Ron Widen, who has come aboard. A modified Ryan from last year. It also seems he's influenced Mitt Romney and other presidential candidates, Ryan has.

RAGO: That's right. And I think the main thing achieved is making people realize that the status quo is gone. It's not an option. So there's only two choices. There's Obama's vision for taxes and entitlements, and there's Paul Ryan's vision. And he's very good at talking about it in terms of moral values. He says, what do you want to do for your kids and grandkids? And that -- that really appeals to people in a way that it's sort of green eye shade, oh, you know, we don't have enough money. He's very good at making people reflect and think about the -- about the path that we're on.

GIGOT: Mary, what about the criticism that Ryan is getting from the right, from Senator Jim DeMint, South Carolina conservative, and the Club for Growth, which is a pro-tax-cutting group? They say it doesn't balance the budget fast enough, the Ryan budget. What about that?


KISSEL: Sacrificing the purpose in the interest of the good and -- you have to start somewhere. And this budget not only tackles entitlements, but it also tackles tax reform. He wants to cut us down to two rates, 25 percent and 10 percent. He also wants to cut the corporate tax and get rid of the alternative minimum tax. He wants to reform welfare. He wants to block-grant Medicaid to the state. You know, there's a lot of reform here. And you have to start somewhere. And I think, you know, as Joe said earlier, you have to set out a plan here for not just for Congress to follow, but also for the presidential candidates, Mitt Romney, I think, is hopefully going to be led a little bit like this and pick up on some of the scenes that Paul Ryan has set out.

GIGOT: The reform wing of the Republican party, such as it is, Dan, has already got the opposition from the establishment wing of the party, which doesn't want to touch this issues, because they're dangerous politically -- and, of course, most of the Democrats, not all, but most of them, including most especially the White House, is against it. If the Republican reform wing starts dividing over these details, there's no chance this kind of thing will succeed.

HENNINGER: Yes, and the Republicans do have that problem of dividing themselves as they have over immigration. But I think the budget-balance wing ever the party has to understand that they are giving away the tax issue, because balancing the budget involves creating enough revenue to balance the budget. And that's the Democrats argument. You don't want to go into their hold because there you will lose.

GIGOT: Right, you'll end up becoming the financier of the welfare state.

All right, we have to take one more break. When he we come back, "Hits and Misses" of the week.


GIGOT: Time now for "Hits and Misses."

Dan, first to you.

HENNINGER: Paul, a clean hit to the National Football League for the huge --


-- suspensions they gave to the New Orleans Saints for paying players to injure players on the opposing teams. Yes, we all know it's a tough game. We also know that perhaps the NFL is trying to avoid lawsuits. And maybe the Saints coach, Sean Payton, is the fall guy in this case. But the NFL really, over the years, been moving with its violence to the edge of criminal thuggery and I think this ruling pulls football back from the edge of that cliff. Good for them.

GIGOT: Here, here.


KISSEL: I have a hit and miss this week. The hit goes to Apple CEO Tim Cook, who said he'd take a chunk out of the company's $98 billion cash file -- yes, that's billion -- and give it back to shareholders in the form of dividends and share buybacks. The miss is to Washington, which still imposes taxes on companies like Apple that want to bring revenue earned overseas back home. Now, Apple has $64 billion sitting overseas subsidiaries and, guess what, guys, it's going to stay there until the tax laws change.



TARANTO: Paul, I have a hit for the Manhattan district attorney's office for its innovative use of social media. Prosecutors are convicting so-called Occupy Wall Street protesters by subpoenaing their Twitter accounts, showing that they intended to break the law and we're aware that they were doing so. One tweeted, quote, "I will tweet until I'm cuffed, smiley face." One Occupy ring leader says this will have a chilling effect on free speech. Let's hope instead it has a deterrent effect on criminal behavior.

GIGOT: Spoken by our Twitter aficionado, James Taranto.


You can read him on Twitter, by the way.

That's it for this week's edition of the "Journal Editorial Report." Thanks to my panel and to all of you for watching. I'm Paul Gigot. We hope to see you right here next week.

Content and Programming Copyright 2012 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2012 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.