Market Commentary
By Art Cashin
Prepared by UBS Financial Services Inc. 

The Obamacare Decision - We had originally intended to explore the scholarly give and take of both the opinion and of the dissent. Both have marvelous allusions to things like the Federalist papers and “original intent”. A full reading is like a visit to the mind gym, a mental workout of the first order. We were also hoping to revisit the original Marbury vs. Madison decision, which we write about every February 24th on its anniversary. (Justice Marshall did not recuse himself even though it was his failure as acting Secretary of State that set up the case.) 

We had intended to write on the nuances of conflict around the rulings. The fact that the dissent was unsigned (a sign of disrespect for the opinion?). The fact that Thomas put in an additional separate dissent. The fact that Ginsberg refers to the multiple dissent as “the opinion” (was Roberts aboard when she wrote it?). 

I was also going to explore the theory of many that Roberts was playing chess while the others were playing checkers. 

That, in the fashion of Marbury vs. Madison, he gave the President a favorable ruling, replete with handcuffs and a straight jacket. 

The more I read the dissent, however, the more I saw the minority’s very evident concern that the Constitutions was being weakened. 

Here is the rather blistering conclusion of the dissent: The Court today decides to save a statute Congress did not write. It rules that what the statute declares to be a requirement with a penalty is instead an option subject to a tax. And it changes the intentionally coercive sanction of a total cut-off of Medicaid funds to a supposedly non-coercive cut-off of only the incremental funds that the Act makes available. 

The Court regards its strained statutory interpretation as judicial modesty. It is not. It amounts instead to a vast judicial overreaching. It creates a debilitated, inoperable version of health-care regulation that Congress did not enact and the public does not expect. It makes enactment of sensible health-care regulation more difficult, since Congress cannot start afresh but must take as its point of departure a jumble of now senseless provisions, provisions that certain interests favored under the Court’s new design will struggle to retain. And it leaves the public and the States to expend vast sums of money on requirements that may or may not survive the necessary congressional revision. 

The Court’s disposition, invented and atextual as it is, does not even have the merit of avoiding constitutional difficulties. It creates them. The holding that the Individual Mandate is a tax raises a difficult constitutional question (what is a direct tax?) that the Court resolves with inadequate deliberation. And the judgment on the Medicaid Expansion issue ushers in new federalism concerns and places an unaccustomed strain upon the Union. 

Those States that decline the Medicaid Expansion must subsidize, by the federal tax dollars taken from their citizens, vast grants to the States that accept the Medicaid Expansion. If that destabilizing political dynamic, so antagonistic to a harmonious Union, is to be introduced at all, it should be by Congress, not by the Judiciary. 

The values that should have determined our course today are caution, minimalism, and the understanding that the Federal Government is one of limited powers. But the Court’s ruling undermines those values at every turn. 

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