WH Chief of Staff: It's a Penalty, 'Doesn't Matter' What SCOTUS Called It

By Susan Jones | July 2, 2012 | 6:56 AM EDT

White House Chief of Staff Jacob Lew talks on FOX News Sunday on Feb. 12, 2012. (AP Photo/Fox News, Fred Watkins)

(CNSNews.com) - Obamacare's individual mandate is not a tax, "it's a penalty," White House chief of staff Jack Lew told Chris Wallace on "Fox News Sunday."

"What the Supreme Court said was, this was constitutional. They said it didn't matter what Congress called it. It was a penalty for 1 percent," Lew said.

"Wait a minute, sir," Wallace replied. "Mr. Lew, they called it a tax."

"No, actually, technically what they said is, the Congress has many powers. There is the Commerce Clause, there's taxing powers, and it was constitutional. That's what they said. It doesn't matter what they call it."

Wallace noted that the nonpartisan Congressional Budget Office has estimated that in 2016, 4 million Americans will pay the tax under Obamacare's individual mandate, and 75 percent of those people will earn less than $120,000 a year. And those same people will pay $27 billion in additional taxes between 2012 and 2021.

"The middle class is taking quite a hit by what the Supreme Court said is a tax," Wallace said.

"I think if you look at all of the laws enacted in the last three-and-a-half years, you would see that those families have a tax cut," Lew responded. "All of the independent analysts, whether it is the Congressional Budget Office or others, would validate that there has been a tax cut for middle class --"  Lew said.

"I'm not arguing that," Wallace cut in. "All I'm saying is that this is a tax increase on the middle class of $27 billion over the next 10 years."

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"No, what this is, this is a law that says if you can afford insurance and you choose not to buy it and you choose to have your health costs be a burden to others, you will pay a penalty so that you will pay your fair share. That is what this law says.

For the 99 percent of the people who buy insurance or get it through the tax cuts that are in this act, they are not going to be affected. You keep your insurance, you don't pay any kind of penalty. For the very few people who decide to be free riders and not have insurance, but still have their costs go into the system so the rest of us pay it, there is a penalty. It is not a burden on the middle class."

Lew noted that the mandate was "defined as a penalty," not a tax, in the law written by Democrats. And he also noted that there are different ways to "justify" a law.

"But there are powers that Congress has, and you can justify a law under multiple ways. The court took that route. It is a penalty. It was defined as a penalty in the law. And it is something people choose, whether or not, to be subject to.

"Most Americans want health insurance," Lew continued. "Ninety-nine percent of people will take advantage of the fact that they have affordable coverage that can protect their families. For the 1 percent that choose not to have insurance, they don't control whether they are going to be in an accident or be struck by illness. If they end up in a hospital and they have to have expensive treatment, those costs will be borne by other people who pay for insurance.

"This penalty says that you cannot be a free rider. You cannot go without any payment. And the penalty is that payment. Very few people will choose it. In Massachusetts, 1 percent of people chose to pay the penalty instead of hav(ing) insurance. People want health insurance."

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