Gruber Challenged on Second Statement Espousing The Same “Nutty” Interpretation Used In Halbig

Screen Shot 2014-07-25 at 9.17.22 AMYesterday, we discussed a controversy involving Jonathan Gruber, a Massachusetts Institute of Technology economist who played a major role the ACA, or “Obamacare.” 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 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. 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. Indeed, Gruber later signed on amicus briefs supporting the White House interpretation and even joined the counter spin from the White House and denouncing that very interpretation as “nutty.” Gruber responded to critics showing the video below by that “I was speaking off-the-cuff. It was just a mistake.” However, now another response has been raised in which Gruber gave the same interpretation during this presentation. In my view, the point is again to ask why both sides have to denounce each other as nuts or extremists when there are good-faith arguments can be made on both sides.

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 addressed 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.

Gruber later insisted that his support for the interpretation was the result of an off-the-cuff comment and a mistake. However, now a second answer is being highlighted where Gruber gives the very same interpretation embraced in Halbig.

Q: You mentioned the health implementation exchanges in the states, and it’s my understanding that if states don’t provide them, then the federal government will provide them. What do you say to that?

GRUBER: Yeah, so these health-insurance Exchanges, you can go on ma.healthconnector.org and see ours in Massachusetts, will be these new shopping places and they’ll be the place that people go to get their subsidies for health insurance. In the law, it says if the states don’t provide them, the federal backstop will. The federal government has been sort of slow in putting out its backstop, I think partly because they want to sort of squeeze the states to do it. I think 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’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, and that they’ll do it. But you know, once again, the politics can get ugly around this.

The point is not to hammered Gruber on this but to address his later criticism of the court and commentators who have embraced this interpretation as simply “nutty.” I happen to agree with the interpretation of the D.C. Circuit as a matter of legisprudence. I believe that the statute is clear and that it is dangerous for a court to read out such express language as “a typo” — just as I believe that it is dangerous for a president to read out such language.

As I noted before, 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. After all, Gruber received almost half a million dollars from the Obama Administration to consult on the ACA and clearly maintaining (at one time) that the provision meant what it says: that states with federal exchanges would not fall under the tax credit benefit.

When confronted on the second discussion, Gruber simply said “same answer.”

84 thoughts on “Gruber Challenged on Second Statement Espousing The Same “Nutty” Interpretation Used In Halbig”

  1. Dave S,

    I had an immigrant (naturalized citizen) neighbor who worked for the government as did his wife. They had a mortgage, a bunch of boats, motorcycles, dune buggies, AND A 40 FT. RV on the side of their house. They deliberately defaulted on their mortgage then applied for a government HAMP modification. They got it. The government program reduced their payment. Of course, the government is the taxpayer. The 40ft. RV was worth $240K when they financed it originally. The appraiser for the HAMP modification saw and knew all about this valuable asset right outside and the government gave my neighbor the HAMP modification anyway. These people did NOT need any assistance and the government gave it to them despite that fact.

    It’s almost as if “assistance” programs are compulsory. They certainly are for the taxpayer who pays for them.

    The inmates have taken over the asylum.

  2. John does go on quite the rant, but he’s quite right. However after reading this blog & it’s assorted commenters for 3-4 years now it is very obvious we have welfare queens & libertarians. To the welfare queens all I would ask is how much extra of your personal income are you sending to govt to provide funding for this stupidity? Do you own a very large house? Seems like a contradiction if you happily use capitalism to provide for you & your family but preach welfarism & nonsense about equality. It’s a fairly simple premise, Tom Sowell said it perfectly, “how much of someone else’s wage do you believe belongs to you?”.
    So IMO the liberal argument falls flat on it’s face, how much of your income that the govt doesn’t steal at the point of a gun do you willingly send the govt? If it’s not a sizeable portion you’re a hypocrite that does one thing and preaches another.
    To John, perhaps I got the name wrong of the commenter, I was skimming comments, my apologies.

  3. Oh yeah. I forgot. America is a THEOCRACY and we all have to do what the Pope says, just like Iran, right? We SHALL be our lazy brother’s keeper (and the brother doesn’t even have to go to work or start his own business, right?).

    That dudn’t make any sense.

    The doctrine of the theocracy. Seriously?

  4. “Millions of people will be thrown back into the streets with no insurance.”

    Rationality Flaw,

    Couldn’t that be anyone? Irrationality suggests a flaw, doesn’t it?

    If the shoe fits, wear it. If it doesn’t, it’s all good, right?

    Where is it in the American thesis that the taxpayer bears the burden for people who don’t bear their own?

    How on God’s green earth did anyone come up with the idea that you go to work to give your paycheck to someone who doesn’t go to work? How on earth did it come to pass that fathers gave their estates to people who don’t work instead of their own children –

    “…TO OURSELVES AND TO OUR POSTERITY…”

    Tell me I didn’t read that.

    That is as un-American as one could possibly be.

    Did Washington or Jefferson avail themselves or anyone else of welfare, food stamps, affirmative action, public school/college, Medicare, social services, student loans, Obama phones, mortgage assistance, rent control, utility subsidies, etc., etc.?

    If taking money from one man to give it to another and giving free stuff to people who don’t work is appropriate now, why wasn’t it appropriate then?

    Who teaches this —-?

    The inmates have taken over the asylum.

  5. Ich mocher ein double zimmer fur … Oops. Sorry wrong blog. Obamacare is dying like Medicare or Social Security are dying. We are all dying.

  6. I’m reposting this comment because it’s suits both threads & this is the newer:
    It’s a bit hard to reconcile Johns opinion of good governance at times. He’s pro ACA but pro civil liberty? It seems like a contradiction on it’s face. I guess I just don’t buy into liberal socialist thinking, despite history, smart men like John agree with policies that are a detriment to people. I just read a comment about John Oliver above and how the GI bill saved his family, patent nonsense, your family would have relied on friends, family & work, yes work you social gooders to make ends meet. Do we not understand that these absurd programs never existed in the past & people still got by? I love Mr. Turleys stands on the constitution & civil liberties but then he throws it away with support for fascist stupidity like the ACA, the Halbig decision is meaningless except in terms of fascism. I’m not sure how one comes to these seemingly opposed notions of social good in their own mind, I’d be confused by this muddled thinking.

    In the end how do you square welfare with any kind of Liberty? For a man of the Constitution, understanding that the Federal Governement was supposed to be strictly limited you’d think logic would prevail, but here we are.

  7. @squeeky: “True. But, it ‘s fun!!!”

    Oh, I don’t disagree with you on that point, dear muckraker, I just like to save it for proven liars and lunatics!

  8. @John: “Is the SCOTUS a LEGAL entity or a RELIGIOUS entity.”

    Funny, I had the same question right after the Hobby Lobby decision. Then it occurred to me they’re a Corporate Entity and it all made sense,

  9. Rationality Flaw,

    I hope that was polite.

    When I read discussions of free money for goldbricks I’m reminded of one of my first jobs. In Vietnam, I had to clean toilets. We pulled halved 55 gallon drums from under the “bathroom,” poured diesel fuel in, lit it and stirred a burning container of —- with a steel pole.

    “You can always get a job. You might not like the job but you can always get a job.”

    “Millions of people will be thrown back into the streets with no insurance.”

    Yeah! Until they go out and get a job (or start their own small business).

    Can you enlighten us as to why the IMPERATIVE to take care of people who won’t work wasn’t firmly ensconced in the founding documents? Where is that taxpayer burden? Was that Washington’s idea or Thomas Jefferson’s?

    I apologize. Self-reliance is my passion because I KNOW everybody can do it.

    And you are welcome for the complement.

    As I intended.

  10. Professor Turley states there is a strong argument for review of this case by the SCOTUS.

    Will the SCOTUS make a LEGAL decision or a MORAL decision.

    Is the SCOTUS a LEGAL entity or a RELIGIOUS entity.

    This is ridiculous jurisprudence.

    The wording of the document clearly obtains tax credits through state exchanges. The author verbally supported that position.

    With a second political decision to support the ACA, the SCOTUS will exceed the limits of the judicial branch as much as, if not more than, the executive branch, which has brought America to a constitutional “tipping point.”

    Where will we be then?

  11. Jill,
    You are not being accurate. I did not say that a president can rewrite any law. I was merely agreeing with the Fourth Circuit interpretation.

  12. John, Sometimes this place is like walking into a 60’s coffee shop.

  13. Ra flaw,

    “Millions of people will be thrown back into the streets with no insurance.”

    And that impacts Americans how, exactly?

    “From each according to his ability, to each according to his need?”

    Are you kidding me? You can say that and not be arrested in America? Did you ever hear of the Cold War? Kennedy fought communism, right? Anywhere, anytime, right?

    JFK – “In the long history of the world only a few generations have been granted the role of defending freedom from its hour of maximum danger. I do not shrink from this responsibility – I welcome it.”

    “DEFENDING FREEDOM.” Well how about a little self-reliance to go along
    with it?

    There may actually be another thesis in the founding writings and documents; something along the lines of freedom and self-reliance.

    Where the hell did you learn that, in Russia? “Millions of people will be thrown back into the streets with no insurance.” So what – Constitutionally and legally speaking? I would recommend that people in the category you refer to get a job or start a business…can they clean toilets – there’s a skill in demand. If it’s appropriate, I would recommend they appeal to a charity with sufficient grounds.

    Since there is no mandate in the Constitution to “take money from one man to give it to another,” you must perceive the American form of government to be that of a THEOCRACY with its attendant charity and admonition to be one’s “brother’s keeper.”

    Some might consider them goldbricking, unmotivated disincentivized parasites.

    So you’re saying that every American must adhere to your religious doctrine of charitable redistribution as a “brother’s keeper.”

    So you do perceive America as a theocracy.

    How about Sharia Law? Could we be that religion for a while? I mean, is your THEOCRACY restricted to exclusively one religion?

    Which religion did you arbitrarily impose on us?

    How about we SEPARATE your collectivist cogitations as religion from the state? Where have we heard that before?

    What do parents teach their children? To NOT take care of themselves. Didn’t your parents teach you to take care of yourself?

    “Millions of people will be thrown back into the streets with no insurance.”

    Why don’t you start a charity? Charity appears to be your passion.

    Seriously. Where did you learn to spend other people’s money? Who taught you that? How/where did you learn that?

    Millions of people should go get a job or start a business and buy their own stinking insurance – health, dental, auto, homeowners, travel, renters, vision, disability, life, whatever they deem appropriate.

    Stupid. Absolutely stupid.

    Healthcare for all your friends is NOT the taxpayer’s burden.

    You are not referencing anything American, Constitutional, legal or in any way binding other than under the Communist Manifesto and, of course, a theocracy.

    The inmates have taken over the asylum.

  14. @Squeeky Fromm: I maintain that there is only the legal issue here. Political name calling is uncivil and a distraction. Which I think is Mr. Turley’s point? But dragging Gruber’s name through the mud is no less offensive than Gruber calling his opponent’s opinions “nutty”.

  15. @Nick Spinelli: “ringhals has both hands full of straw, grasping desperately. Sad to see.”

    Grasping at straws? How? are anti-ACA conservatives Scott Galupo and economist Scott Sumner grasping at straws? By defending the integrity of a man they strongly disagree with?

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