Thursday, June 28, 2012

How Justice Roberts Saved Social Security Privatization

We all know that the Republican Party loved the idea of a health insurance mandate before they learned to hate it. But it was not so long ago that a significant number of Republicans embraced another mandate: Social Security privatization. Rather than having the Social Security Administration invest in government bonds, the idea was that taxpayers would be given a list of private investment accounts and be required to put at least some of their money into those private accounts.

Before today it was difficult to see how you could reconcile the idea that a health insurance mandate was a horrendous abuse of the Commerce Clause, but forcing taxpayers to invest in private accounts remained constitutionally viable. Now, just as the penalty behind the mandate is shrugged off, "It's a tax, and the government is allowed to try to influence behavior through taxes," it seems that the same sort of distinction can be made in relation to Social Security. If there is no, um, public option - if one of the choices available is not "keep investing in government bonds" - that position may be a bit weaker; but if such an option is available, even if there is a penalty to sticking with that option (e.g., for every $1 you can put in a private account, you get only 75 cents to put into bonds), under Roberts' holding it's simply an exercise of the power of taxation.

As for justices who might try to hold Social Security privatization unconstitutional, they would have the choice of endorsing the Court's view that the "activity/inactivity" distinction is constitutionally valid, in which case Roberts would agree but assert "but this is a tax, so that's irrelevant", or they would have to work within the confines of tax law, to which Roberts could respond, "This is far less coercive than the health insurance 'tax', yet you voted to uphold that tax."

I'll grant, Social Security privatization is not imminent. G.W. pushed the idea, attempted to rebrand it when it proved unpopular, and was ultimately unable to convince a majority of the members of his own party to pass legislation. Right now it's a dream, but proponents of privatization should be grateful to Justice Roberts for keeping the dream alive.

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