* Romney campaign says mandate did not create tax
* Comment dulls Republican attacks
* Romney tries to shift back to economy
WASHINGTON, July 2 (Reuters) - When the Supreme Court upheld President Barack Obama’s healthcare law as constitutional last week, it gave a little something to his Republican foes: The court declared that the fee charged to most Americans who refuse to buy health insurance amounts to a tax - and not a penalty, as Obama says.
In the heat of a presidential campaign, that’s a key distinction. Since Thursday’s ruling, many Republicans have accused Obama of imposing a massive “tax” through his healthcare law, saying it disproves the president’s claim that he has not raised taxes on the middle class.
But on Monday, Obama’s rival for the White House, Republican Mitt Romney, took some of the air out of his party’s assault on the president over healthcare. Campaign spokesman Eric Fehrnstrom acknowledged that Romney does not see the healthcare penalty as a tax, and instead considers it a penalty.
Fehrnstrom’s comments to MSNBC, which were accompanied by a new push by the Romney campaign to focus on jobs, indicated that Romney’s team does not want to linger on the healthcare ruling - a victory for Obama in court - and instead is keen to highlight Obama’s weakness, the economy.
Despite campaigning on a vow to scrap Obama’s healthcare law on his first day in office, Romney’s argument is weakened because he backed a similar overhaul when he was governor of Massachusetts.
And the healthcare debate reminds voters that Romney supported an “individual mandate” in Massachusetts, similar to the provision in Obama’s law that requires Americans to get health insurance.
Romney adviser Fehrnstrom’s comment meant that the Republican candidate essentially agrees with the White House that the official sanction for not buying health insurance is a penalty, not a tax.
“The governor has consistently described the mandate as a penalty,” Fehrnstrom said.
His remarks worried some Republicans who fear the Romney campaign is undercutting one of the party’s key arguments against Obama’s healthcare plan.
COMMENTS DON‘T HELP REPUBLICANS
“That’s taking a weapon away from Republicans on the issue,” said a Republican strategist in Washington, who spoke on condition of anonymity. “I don’t think it’s very helpful. The tax issue is the one issue that rallied Republicans.”
The Romney campaign began trying to turn away from healthcare and return its focus to Americans’ top concern in the campaign, the flagging U.S. economy and the 8.2 percent jobless rate.
With Obama preparing a campaign bus tour through Ohio and Pennsylvania this week, Romney’s team issued a memo from two Republican senators from those states, Rob Portman and Pat Toomey, pointing out campaign promises Obama made four years ago that have been unfulfilled.
“He made a promise on nearly every critical issue of the day- employment, energy, healthcare, housing, and the deficit - that our lives would be better off today if his policies were enacted,” they wrote. “By his own standards, he has fallen far short on each and every issue.”
Playing into their argument was a new sign of the economy’s continuing weakness. U.S. manufacturing shrank in June for the first time in nearly three years as new orders plummeted, the Institute of Supply Management said.
Polls consistently show that voters are much more worried about the economy than any other issue. That is in line with Romney’s efforts to portray himself as a job creator with real life experience as a business executive.
A Reuters/Ipsos survey over the weekend showed Americans’ support for Obama’s healthcare law had risen to 48 percent after Thursday’s Supreme Court ruling, up from 43 percent in a poll just before the decision. But most people still oppose the law.
The Obama campaign emailed Fehrnstrom’s comments about the individual mandate to reporters to point out the weakness in Romney’s healthcare message.
Romney’s backing for the Massachusetts healthcare law gave ammunition to his conservative opponents during the Republican primary season.
“I think this issue is going to be a little tricky for the Romney campaign to navigate because of his history on healthcare in Massachusetts,” said Republican strategist Hogan Gidley, who was a senior adviser to Rick Santorum’s Republican presidential campaign.
Fehrnstrom insisted to MSNBC that it is Obama’s positions on healthcare - and the individual mandate - that are contradictory.
The president argued long and hard in urging Congress to pass the law that the penalty for not complying with the mandate should not be seen as a tax. Then, Obama’s lawyers argued to the Supreme Court that it was a tax.
“Now he is back to arguing that it’s not a tax. So he’s all over the map,” Fehrnstrom said.
The minimum penalty, or tax, for not buying health insurance will be $695 per person as of 2016, with the fine rising to several thousand dollars depending on the person’s income.
The non-partisan Congressional Budget Office says Obama’s healthcare overhaul will raise $500 billion in taxes over 10 years. This total includes a range of taxes associated with the legislation, not just the penalty for not buying insurance.
“We’ve always argued that Obamacare is a tax raiser, not because of the mandate, but because of the 18 individual tax increases in the bill, ranging from a medical device tax, to a new investment income tax, to higher Medicare taxes,” said a senior Romney adviser. (Writing by Alistair Bell; Editing by Cynthia Osterman)