There is an interesting twist this morning on the controversy over the Halbig decision that we have previously discussed. As I have stated in testimony before Congress and columns, I do not view the law as ambiguous and agree with the conclusion in Halbig as a matter of statutory interpretation, even though I think that the change ordered by the Obama Administration makes sense. Nevertheless, the White House and various supporters have insisted that the key language in the law linking tax credits to exchanges “established by a State” was a typo and nothing more. One of those voices has been Jonathan Gruber, a Massachusetts Institute of Technology economist who played a major role in the drafting of the law and was paid almost half of a million dollars to consult with the Administration on the law. He told MSNBC recently that “It is unambiguous this is a typo. Literally every single person involved in the crafting of this law has said that it`s a typo, that they had no intention of excluding the federal states.” However, a libertarian group just uncovered a video showing Gruber saying quite clearly after the passage of the law that this provision was a quid pro quo device: state exchanges for tax credits. Conservative sites have lit up over the video below showing Gruber essentially describing the very tradeoff identified in Halbig.
As I explained in my testimony, at issue is the express language of the statute that ties the creation of state (as opposed to federal) exchanges to the availability of tax credits. Congress established the authority of states to create their own exchanges under Section 1311. If states failed to do so, federal exchanges could be established under Section 1321 of the Act. However, in Section 1401, Congress established Section 36B of the Internal Revenue Code to authorize tax credits to help qualifying individuals purchase health insurance. However, Section 1401 expressly links tax credits to qualifying insurance plans purchased “through an Exchange
established by the State under 1311.” The language that the qualifying exchange is “established by the State” seems quite clear, but the Administration faced a serious threat to the viability of the Act when 34 states opted not to create exchanges. The Administration responded with an interpretation that mandates: any exchange – state or federal – would now be a basis for tax credits. In adopting the statutory construction, the Administration committed potentially billions in tax credits that were not approved by Congress. The size of this financial commitment without congressional approval also strikes at the essence of congressional control over appropriation and budgetary matters.
Around the 31 minutes mark on the video below, Gruber addresses the issue:
What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges. But, you know, once again the politics can get ugly around this.
Critics have called out Gruber for later joining the counter spin from the White House and denouncing that very interpretation as “nutty.”
I can understand Gruber changing his views on the issue and there is no need to pummel him. He is quoted on one site in explaining that “I was speaking off-the-cuff. It was just a mistake.” However, in fairness, it does show that even supporters at the time viewed the language as meaning exactly what it said. The import is that there was a carrot and stick approach to exchanges. In crafting the act, Congress created incentives for states to set up health insurance exchanges and disincentives for them to opt out. The law, for example, made the subsidies available only to those enrolled in insurance plans through exchanges “established by the state.” However, to the great surprise of the administration — some 34 states opted not to establish their own exchanges, leaving it to the federal government to do so. This left the White House with a dilemma: If only those enrollees in states that created exchanges were eligible for subsidies, a huge pool of people would be unable to afford coverage, and the entire program would be in danger of collapse.
In the end, this issue will not be decided by spin but statutory interpretation. It will be interesting to see if both the Fourth Circuit and D.C. Circuit opinions go to en banc review. You could have the D.C. Circuit flip the result in favor of the Administration and the Fourth Circuit flip in favor of the challengers — preserving the split in the circuits. Even without such a split, however, there is a strong argument for Supreme Court review. It will be equally interesting to see if briefs bring in Gruber’s statement since he has signed amicus briefs in favor of the Administration’s interpretation.
nick spinelli:
“Mespo, I never thought what I thought was an urbane barrister gentleman could be so naïve about lobbyists and laws.”
***********************
Having been one and serving as an aid on a legislative committee, I surely doubt it.
@JohnO
Thank you!!!
Squeeky Fromm
Girl Reporter
Nick and Squeeky,
I’m enjoying your posts; keep up the good work.
Squeeky, You obviously have a good handle on it. I had opiates ruin the life of a close family member.
@nicks
Thank you for the warning! But I can leave them alone real easily. I haven’t taken but 1 of them since last Saturday when I got home. I still have a dozen or so left over from 2007 or so. I like them but I am scairt of them.
Squeeky Fromm
Girl Reporter
So, I guess we are all agreed that the Obama consultant has done himself in by his at least two video appearances backing the DC Circuit. I am guessing this because the thread has been seriously hijacked. No one here would try to change the topic just to get the heat of the Obama stooges.
The NYT business section reports today a sobering economic figure. In 2003 the net worth of the typical US household was 88k. Now it is 56k, a 36% decline. That covers both Bush and Obama. The only beneficiaries of this faux recovery are Obama’s buddies on Wall Street.
Squeeky, No lecture but be cautious w/ those opiates. I’ve seen them ruin lives. That’s all I’ll say.
Gitmo was supposed to be closed 5 years ago.
Mespo, A “cut back” 6 years into his regime, done out of embarrassment for getting caught. Come on, mespo, step up your game.
@messpoo:
Well, that is where you can go, but I want to know how many people are just no longer in the workforce. Sooo, here is a place you can go to get a better understanding of that:
http://www.zerohedge.com/news/2013-04-05/people-not-labor-force-soar-663000-90-million-labor-force-participation-rate-1979-le
Plus, you are already halfway to enlightenment. Because you are already saying “bah bah” when the government shoots you that 6.1% number. All you have to is add a “humbug” to your “bah!”
Squeeky Fromm
Girl Reporter
davidowen,
It is not a typo.
When Gruber says on the video “the consumer must be in a state-run exchange to obtain tax credits,” it eliminates any ambiguity.
A person must be in a state-run exchange – to obtain tax credits.
Being in a federal exchange or federal “backstop” will NOT obtain tax credits.
That is what Gruber said and it is clear and it clarifies any and all laws and evidence before any court.
The Court will objectively conclude that the state exchange is the only place where the subsidy or tax credit can be obtained or the court will simply “vote” based on the ideology and party affiliation of the individual judges.
The judicial branch exists to determine if actions comport with law.
The judicial branch does not have the power to generate law based on political bias, ideology and party affiliation. That is the power and duty of the Congress.
The judges will turn themselves into legislators by issuing a corrupt decision.
The entire judicial branch must no longer be allowed to usurp power and engage in corruption with impunity.
Mespo, I never thought what I thought was an urbane barrister gentleman could be so naïve about lobbyists and laws. There are NO laws written any longer w/o lobbyists sliming it. In 1970 less than 10% of retiring Congress members became lobbyists. When the superb book “This Town” was written in 2013, 48% of retiring Congressman became lobbyists. It may be over 50% today. You’re close to DC but you obviously don’t understand it. That’s because of your cult prism. There has been a paradigm shift since you took civics Mespo. The game is rigged. DC is now the WEALTHIEST city in the US.
“Tact is the ability to tell someone to go to hell in such a way that they look forward to the trip.” Churchill
mespo, when you get pissed your default mode is ridicule and condescension. That is not the tact needed. That stuff used to work here, but it has played. It is a new paradigm now. The sides are even now. One must adapt or perish. Besides This Town, may I suggest a book The Power of Habit. I do not make these suggestions w/ condescension. The Power of Habit gives invaluable information to anyone who wants to understand people, explaining how and why habits are formed. It shows how to break bad ones and the positive aspect of how to create good habits.
You’re pissed @ me and the conservatives that have come here and “ruined” this nice blog. Get out your anger. But, they’re here to stay. That’s a good thing. I respect you and I know when you get past this you will go back to respecting me. If you would like to hash this out via back channels I would be happy to do it. This discussion has been acerbic but civil. I want it to remain civil out of respect to our host.
@messpoo
Well, you can just bleat in contentment when the government tells you that the unemployment rate 6.1%, but little old cantankerous me wants to know where that number comes from. When you see that people who are unemployed and not actively seeking work are not included as “unemployed” in the 6.1%, then that makes me suspicious. Sooo, you can pretend the “facts” are on your side, but really it is just “the way the government counts the number” that is on your side. That is not a distinction without a difference.
Squeeky Fromm
Girl Reporter
Squeeky:
I’ll even give the readers a hint of where to go:
http://www.washingtonpost.com/blogs/govbeat/wp/2014/07/19/fourteen-states-are-already-beating-the-best-fed-estimates-for-2016-u-s-unemployment/
14 states have unemployment below 5%.
@nicks
Kinda weaned off them. I have a bottle with 60 pills, but I hate to waste them on something as mundane as pain. Plus, I have some old ones from years ago that I will use up first. But I am sitting up more often and can get to my laptop and my guitar. I swear, all that inactivity took a toll on me.
Squeeky Fromm
Girl reporter
Squeeky:
I never expect you to believe facts that don’t agree with your preconceived delusion. I just want others to check my facts against your “feelings.”
Nick:
“SWM, We have gone over the surveillance state previously. Bush started it w/ the Patriot Act. When Obama took office he set his Chicago politics eyes on it and had a pants tent for months. He doubled down on it. That’s evident to all but sycophants. Shit, he bragged about his kill list, adores drones, and kills US citizens w/o due process.”
*******************
Actually nick Obama cut back on bush’s excesses but why dwell on facts when venom plays better:
In a speech at the Justice Department, Obama ordered several immediate steps to limit the NSA program that collects domestic phone records, one of the surveillance practices that was exposed last year by former intelligence contractor Edward Snowden.
-Washington Post (1/17/2014)
@messpoo
Do you reeeaaaallly believe it is 6.1%??? Because I don’t.
“But the “official” unemployment rate doesn’t count men and women like G. — discouraged workers who have settled for part-time jobs or have given up looking altogether. Tracking those individuals, under what’s called the “U-6″ rate, gives a very different measure of the nation’s unemployment rate: 14.3%.”
http://www.forbes.com/sites/dandiamond/2013/07/05/why-the-real-unemployment-rate-is-higher-than-you-think/
Squeeky Fromm
Girl Reporter
Nick:
I was just being generous with the 5%.