Obama: Mandate is Not a Tax

President Obama signaled in our interview that he was prepared to address some of the concerns raised by key Senator Jay Rockefeller, who called the Baucus bill a "big middle class tax increase" this week.

That means he'll support more subsidies for middle class families.

But in our most spirited exchange, the President refused to accept the argument that a mandate to buy health insurance is equivalent to a tax.

Here it is:

STEPHANOPOULOS: You were against the individual mandate…

OBAMA: Yes.

STEPHANOPOULOS: …during the campaign. Under this mandate, the government is forcing people to spend money, fining you if you don’t. How is that not a tax?

OBAMA: Well, hold on a second, George. Here — here's what's happening. You and I are both paying $900, on average — our families — in higher premiums because of uncompensated care. Now what I've said is that if you can't afford health insurance, you certainly shouldn't be punished for that. That's just piling on. If, on the other hand, we're giving tax credits, we've set up an exchange, you are now part of a big pool, we've driven down the costs, we've done everything we can and you actually can afford health insurance, but you've just decided, you know what, I want to take my chances. And then you get hit by a bus and you and I have to pay for the emergency room care, that's…

STEPHANOPOULOS: That may be, but it's still a tax increase.

OBAMA: No. That's not true, George. The — for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase. What it's saying is, is that we're not going to have other people carrying your burdens for you anymore than the fact that right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase. People say to themselves, that is a fair way to make sure that if you hit my car, that I'm not covering all the costs.

STEPHANOPOULOS: But it may be fair, it may be good public policy…

OBAMA: No, but — but, George, you — you can't just make up that language and decide that that's called a tax increase. Any…

STEPHANOPOULOS: Here’s the…

OBAMA: What — what — if I — if I say that right now your premiums are going to be going up by 5 or 8 or 10 percent next year and you say well, that's not a tax increase; but, on the other hand, if I say that I don't want to have to pay for you not carrying coverage even after I give you tax credits that make it affordable, then…

STEPHANOPOULOS: I — I don't think I'm making it up. Merriam Webster's Dictionary: Tax — "a charge, usually of money, imposed by authority on persons or property for public purposes."

OBAMA: George, the fact that you looked up Merriam's Dictionary, the definition of tax increase, indicates to me that you're stretching a little bit right now. Otherwise, you wouldn't have gone to the dictionary to check on the definition. I mean what…

STEPHANOPOULOS: Well, no, but…

OBAMA: …what you're saying is…

STEPHANOPOULOS: I wanted to check for myself. But your critics say it is a tax increase.

OBAMA: My critics say everything is a tax increase. My critics say that I'm taking over every sector of the economy. You know that. Look, we can have a legitimate debate about whether or not we're going to have an individual mandate or not, but…