348 (Author at Cato Institute) https://www.cato.org/rss/people/348 en Redefining “Waters of the United States” https://www.cato.org/summer-2019/redefining-waters-united-states?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Mon, 10 Jun 2019 03:00:00 -0400 Jonathan H. Adler https://www.cato.org/summer-2019/redefining-waters-united-states?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Libertarians’ Legal Influence https://www.cato.org/julyaugust-2017/libertarians-legal-influence?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Roger Pilon, Jonathan H. Adler, Timothy Sandefur <div class="lead text-default"> <p><em>In the past 40 years, has the legal landscape changed for the better? Cato’s <strong>Roger Pilon</strong>, Case Western Reserve’s <strong>Jonathan H. Adler</strong>, and the Goldwater Institute’s <strong>Timothy Sandefur</strong> shared some thoughts on the rise of libertarian perspectives in law.</em></p> </div> , <div class="text-default"> <p> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="3123805f-b222-4ee4-a0f4-85e696a32906" class="align-right embedded-entity" data-langcode="en"> <img width="300" height="200" alt="Media Name: cpr-v39n4-pilon.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cpr-v39n4/cpr-v39n4-pilon.jpg?itok=ixBjXsPe 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cpr-v39n4/cpr-v39n4-pilon.jpg?itok=LCpXjc4O 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cpr-v39n4/cpr-v39n4-pilon.jpg?itok=ixBjXsPe" typeof="Image" /></div> <strong>ROGER PILON:</strong> In 1983, when I was in the Reagan administration, I called up Jim Dorn and suggested that Cato put together a conference on economic liberties and the judiciary. He set up a lunch for the two of us and Ed Crane, and on the back of a paper napkin I sketched the program for that conference. A year later, Cato ran it. It opened with a scintillating debate between then-Judge Antonin Scalia and Chicago Law Professor Richard Epstein over the proper role of the courts in protecting economic liberty. The fur flew. A year later the American Enterprise Institute published the debate as a pamphlet. Cato published the whole conference in the <em>Cato Journal</em>. And George Mason University republished the proceedings after that, with a foreword by Judge Alex Kozinski. That was Washington’s introduction to the idea that there is a third school between the two then-dominant schools: liberal judicial activism and conservative judicial restraint. And the idea took off from there, culminating in the creation of Cato’s Center for Constitutional Studies in early 1989. Since then, we have worked to gradually change the debate. Indeed, in the past two decades it’s the liberal camp that’s calling conservative justices “judicial activists.” Yet what we’ve been urging is not the old liberal judicial activism, but judicial engagement — enforcing the Constitution’s doctrine of enumerated powers on one hand, and securing rights, both enumerated and unenumerated, on the other hand. In other words, let’s start to restore the Madisonian Constitution. And I’m very happy to say that when you look at the debate today, judges are much more conversant with this approach to the Constitution than they were 30 and 40 years ago. It takes time. <p><strong>JONATHAN H. ADLER:</strong> The problem of ideological uniformity still manifests itself in legal scholarship. Not only did most legal academics not agree with the challenges to the Affordable Care Act, I think it’s fair to say most legal academics didn’t <em>understand</em> the challenges to the Affordable Care Act, didn’t understand why a mandate to purchase insurance was qualitatively different than the other sorts of things the Supreme Court had allowed under the Commerce Clause. That continues to be a problem, although I think it’s a problem that is declining. The good news is that libertarian ideas have an increasing influence in a large number of areas of law. The volume of scholarship that takes either explicitly or implicitly a libertarian point of view, or merely accepts libertarian premises, whether to support them or to challenge them, has increased over time both in volume and in influence. This began in many respects with the law and economics movement, when many scholars across the political spectrum recognized that economic analysis of law is very powerful. In certain areas, antitrust being the best example, this led to changes in our understanding of economic organization and not only influenced scholarship but also ended up influencing courts as well. We’re beginning to see something similar in what’s referred to as institutional economics, and a greater understanding of the way property-based institutions and private ordering allow people alone and in groups to solve problems that we might otherwise turn to government to address. Certainly originalist scholarship is hugely important these days and has expanded dramatically. It used to be that originalism was nothing more than a basis to criticize the Warren Court. It is now a really robust area of research, and is being engaged with across the political spectrum. There is now even a group of progressive scholars who characterize themselves as “originalists,” who recognize that in a constitutional debate, whether one likes the idea of the original public meaning or not, it is something that one has to engage with. We can debate whether the original public meaning of the Constitution is perfectly libertarian, but it’s certainly more libertarian than what we have now, and so an active debate on originalism is very positive.</p> <p> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="1e7a7584-6606-48c2-9bd4-6b038b458832" class="align-right embedded-entity" data-langcode="en"> <img width="663" height="968" alt="Media Name: cpr-v39n4-sandefur.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cpr-v39n4/cpr-v39n4-sandefur.jpg?itok=sCj4vdV1 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cpr-v39n4/cpr-v39n4-sandefur.jpg?itok=1oDtoVoX 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cpr-v39n4/cpr-v39n4-sandefur.jpg?itok=sCj4vdV1" typeof="Image" /></div> <strong>TIMOTHY SANDEFUR:</strong> In his 2008 book <em>The Rise of the Conservative Legal Movement</em>, Steven Teles divides the history of litigation in defense of constitutional freedoms into basically two stages. The first stage began in 1973 with the creation of the Pacific Legal Foundation, which was the first of the libertarian/conservative public interest legal foundations to be created. The story goes that then-governor Ronald Reagan was frustrated by the ACLU and other groups opposing his welfare reforms, and he expressed his frustration to some of his staff members who were lawyers, and they said, “Well, why don’t we start our own version that would be litigating in defense of economic freedom and property rights?” So they founded the Pacific Legal Foundation. And similar groups followed after that. The second stage, according to Teles, begins in the early ’90s with the foundation of the Institute for Justice. And what made their approach unique was a focus on humanizing these issues, on storytelling, on demonstrating how abstract constitutional matters affect ordinary people in their daily lives. And that really was revolutionary in this field. <p>I think, in fact, the first generation of organizations has learned a lot from that second generation. On the other hand, it’s been said that law is the trailing edge of culture, and I think that’s very true. Lawyers can come in and litigate a case, and they can win it, but it takes a lot of work in the trenches — journalists and social scientists and theorists and scholars — they have to lay the groundwork for successful litigation to really make a big difference. I think what we’ve accomplished in the second generation, which we owe largely to people like Chip Mellor, John Kramer, and Clint Bolick, is teaching people these stories, but what we owe to Cato is building that theoretical base. We’ve raised a new generation of young lawyers who are rethinking the post– New Deal orthodoxy, and we’re starting to see them advance to the next stage in the legal profession, so in that sense, I’m very optimistic in the long run. In fact, we in Arizona just saw Clint Bolick get appointed to the Arizona Supreme Court (thus vacating the office that I now occupy) — so I think we’re going to see a lot more progress in the future.</p> </div> Fri, 18 Aug 2017 10:32:00 -0400 Roger Pilon, Jonathan H. Adler, Timothy Sandefur https://www.cato.org/julyaugust-2017/libertarians-legal-influence?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Cato’s 40th Anniversary Celebration: The Growth and Future of the Libertarian Legal Movement https://www.cato.org/multimedia/growth-future-libertarian-legal-movement?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Sat, 06 May 2017 17:18:00 -0400 Jonathan H. Adler, Timothy Sandefur, Ilya Shapiro, Roger Pilon https://www.cato.org/multimedia/growth-future-libertarian-legal-movement?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Business and the Roberts Court https://www.cato.org/events/business-roberts-court?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Jonathan H. Adler, Andrew Pincus, Walter Olson <p></p><div class="event-book"><a href="https://www.amazon.com/Business-Roberts-Court-Jonathan-Adler/dp/0199859345?tag=catoinstitute-20" target="_blank"><img border="0" data-src="https://object.cato.org/sites/cato.org/files/images/business-roberts-court-cover.jpg" class=" lozad" /></a></div>Is the Supreme Court "pro-business?" That's a claim often heard from critics of the Roberts Court, now circulating once more amid a likely battle over the confirmation of a successor to the late Justice Antonin Scalia. But what does the claim mean? Does it charge the Court with ruling wrongly in favor of business litigants, with shaping legal doctrine in unprincipled ways, or with something else? In <em>Business and the Roberts Court</em>, Professor Jonathan Adler assembles essays from scholars who consider how and whether Roberts Court decisions can or cannot be fairly deemed favorable to business. One pattern is that this Court follows doctrinal commitments — in areas from free speech to federalism to employment and securities law — that sometimes though not always coincide with the interests of producers and employers in the national economy. As the Senate considers President Trump's nomination of Neil Gorsuch to the vacant seat on the Court, join us for a book forum on one of the most important elements of Chief Justice John Roberts' rule — and Antonin Scalia's legacy. Thu, 02 Mar 2017 16:13:00 -0500 Jonathan H. Adler, Andrew Pincus, Walter Olson https://www.cato.org/events/business-roberts-court?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss There Is No Consumer ‘Right to Know’ https://www.cato.org/fall-2016/there-no-consumer-right-know?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Fri, 23 Sep 2016 00:36:00 -0400 Jonathan H. Adler https://www.cato.org/fall-2016/there-no-consumer-right-know?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss King v. Burwell and the Triumph of Selective Contextualism https://www.cato.org/2014-2015/king-v-burwell-triumph-selective-contextualism?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Wed, 16 Sep 2015 00:20:00 -0400 Jonathan H. Adler, Michael F. Cannon https://www.cato.org/2014-2015/king-v-burwell-triumph-selective-contextualism?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss People for the Ethical Treatment of Property Owners v. U.S. Fish and Wildlife Service https://www.cato.org/legal-briefs/people-ethical-treatment-property-owners-v-us-fish-wildlife-service?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Roger Pilon, Ilya Shapiro, Trevor Burrus, Julio Colomba, Jonathan H. Adler, Josh Blackman <div class="lead text-default"> <p>The U.S. Fish and Wildlife Service, exercising power purportedly delegated to it pursuant to Congress’s power to regulate interstate commerce, has classified the ubiquitous Utah prairie dog, which has no commercial value and has never dug holes in any lands beyond southwestern Utah, as “threatened” under the Endangered Species Act (ESA), thereby prohibiting the “take” of said prairie dogs—which essentially means doing anything that disturbs the little rodents’ habitat. If the varmints invade their property, human residents cannot build homes, start or operate certain businesses, or, in the case of Cedar City, protect playgrounds, an airport, and a local cemetery from their burrowing and barking. Joining as People for the Ethical Treatment of Property Owners (PETPO), and represented by the Pacific Legal Foundation, residents filed suit, claiming that the “take” rule for the noncommercial, intrastate Utah prairie dog exceeds Congress’s power to regulate interstate commerce. Congress has the power to regulate “commerce among the states,” not species. PETPO’s suit argues that the ESA cannot reach activities that are intrastate and noncommercial—activities, for example, like filling holes in your lawn or otherwise developing land where prairie dogs might live. The federal district court agreed and therefore struck down the “take” regulation. The case is now before the Tenth Circuit Court of Appeals. Joined by constitutional law professors Jonathan H. Adler, James L. Huffman, and Josh Blackman, Cato has filed a brief supporting the landowners. We argue, consistent with prior Supreme Court precedent, that the Constitution’s Commerce Clause affords Congress the power to regulate only items, channels, or instrumentalities of interstate commerce. If Congress wants to regulate activities that “substantially affect” interstate commerce, that power rests in the Necessary and Proper Clause, which gives Congress the <em>means</em> to regulate interstate commerce—provided those means are both necessary and proper. But the prohibited activities do not substantially affect interstate commerce. Moreover, the “take” rule is not necessary for regulating interstate commerce; Congress can regulate that commerce without prohibiting these residents from using their property. Nor is the rule proper since the power to regulate uses of property that do not affect interstate commerce belongs to the states. For those several reasons the “take” rule as applied to the Utah prairie dog exceeds the powers the Founders and the Founding generation delegated to Congress.</p> </div> Tue, 26 May 2015 15:39:00 -0400 Roger Pilon, Ilya Shapiro, Trevor Burrus, Julio Colomba, Jonathan H. Adler, Josh Blackman https://www.cato.org/legal-briefs/people-ethical-treatment-property-owners-v-us-fish-wildlife-service?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Bootleggers, Baptists, and E-Cigs https://www.cato.org/spring-2015/bootleggers-baptists-e-cigs?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Fri, 20 Mar 2015 11:56:00 -0400 Jonathan H. Adler, Roger E. Meiners, Andrew P. Morriss, Bruce Yandle https://www.cato.org/spring-2015/bootleggers-baptists-e-cigs?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss King v. Burwell: Desperately Seeking Ambiguity in Clear Statutory Text https://www.cato.org/king-v-burwell-desperately-seeking-ambiguity-clear-statutory-text?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Mon, 23 Feb 2015 09:48:00 -0500 Jonathan H. Adler, Michael F. Cannon https://www.cato.org/king-v-burwell-desperately-seeking-ambiguity-clear-statutory-text?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Everything You Need to Know about King v. Burwell https://www.cato.org/daily-podcast/everything-you-need-know-about-king-v-burwell?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Jonathan H. Adler <p>As Obamacare heads back to the Supreme Court, Jonathan Adler explains everything you need to know ahead of the March 4 oral argument.</p> Wed, 04 Feb 2015 12:14:00 -0500 Jonathan H. Adler https://www.cato.org/daily-podcast/everything-you-need-know-about-king-v-burwell?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss King v. Burwell https://www.cato.org/legal-briefs/king-v-burwell-1?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Michael F. Cannon, Jonathan H. Adler <div class="lead text-default"> <p>The Patient Protection and Affordable Care Act of 2010 ("PPACA"), Pub. L. No. 111-148, 124 Stat. 119, authorizes tax credits for the purchase of health insurance in state-established Exchanges, and only in such Exchanges. Insofar as the IRS has sought to provide tax credits for the purchase of health insurance in federally established Exchanges, its actions are contrary to law and must be set aside. </p> </div> , <div class="text-default"> <p>Section 1311 of the PPACA (42 U.S.C. § 18031) declares that "Each State shall ... establish" an "Exchange" to regulate health insurance within the state. Section 1321 (42 U.S.C. § 18041) directs the federal government to "establish" Exchanges "within" states that "[f]ail[] to establish [an] Exchange" or implement other specified provisions of the Act. Section 1401 (26 U.S.C. § 36B) offers health-insurance "tax credits" to certain taxpayers who enroll in a qualified health plan "through an Exchange established by the State." The statute limits tax credits to state established Exchanges in a manner that is plain and unambiguous. The remainder of the statute and the PPACA's legislative history are fully consistent with those provisions.</p> <p>Such conditions are not anomalous. To induce state cooperation, Congress routinely conditions federal benefits to individuals — via both direct spending and the tax code — on their states carrying out congressional priorities. Congress conditioned federal subsidies on state action on multiple occasions throughout the PPACA. It did so here as well.</p> <p>The text of the PPACA is sufficient to resolve this case. Resort to legislative history only reinforces this conclusion. That history supports the plain meaning of the text, and reveals why PPACA supporters approved this requirement even if many of them would have preferred otherwise. Political necessity required the Act's authors to give states a leading role in operating health-insurance Exchanges. In so doing, the Act's authors expressly conditioned premium-assistance tax credits on states establishing Exchanges and performing other tasks. Many of the Act's supporters preferred a different approach. But after those supporters lost their filibuster-proof majority in the U.S. Senate, no other approach could satisfy the constitutional requirements of bicameralism and presentment.</p> <p>In 2012, the Internal Revenue Service issued a rule that altered that political tradeoff. The IRS rule offers premium-assistance tax credits through Exchanges that were established not by the State, but rather by the federal government. The agency is presently issuing those tax credits in the 36 states that refused or otherwise failed to establish an Exchange.</p> <p>The IRS rule is contrary to the plain language of the PPACA. The statutory text speaks directly to the question at issue. Thus the IRS has no authority to provide tax credits in federal Exchanges. Nor is the IRS due deference in its interpretation of the Act. Contrary to the Government's argument that the rule supports one of the Act's general goals, the rule actually subverts congressional intent by altering the balance Congress struck between the Act's competing goals. It tries to achieve through regulatory fiat what PPACA supporters could not achieve through the political process: a health care bill that does not rely on state cooperation.</p> <p>The Government has not identified any statutory provisions that conflict with the plain meaning of the PPACA's tax-credit eligibility provisions. Nor has the agency identified a single contemporaneous statement indicating PPACA supporters expected this bill to offer tax credits in federal Exchanges. The IRS simply rewrote the statute. The IRS's regulation is therefore contrary to law and should be set aside.</p> </div> Tue, 30 Dec 2014 09:27:00 -0500 Michael F. Cannon, Jonathan H. Adler https://www.cato.org/legal-briefs/king-v-burwell-1?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Cato Institute Policy Perspectives 2014 https://www.cato.org/events/cato-institute-policy-perspectives-2014-1?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss John A. Allison, Eric O&#039;Keefe, Jonathan H. Adler, Michael F. Cannon <p><a href="https://www.cato.org/people/john-allison"><strong> John Allison</strong></a>, President and CEO, Cato Institute 11:00 &ndash; 11:30 a.m. <strong>Keynote Address &mdash; Criminalizing Political Speech</strong><br /><br /> <strong>Eric O'Keefe</strong>, Director and Treasurer, Wisconsin Club for Growth 11:30 a.m. &ndash; 12:10 p.m. <strong>The Implementation of Obamacare and Death of the Rule of Law</strong><br /> <strong><br /> Jonathan Adler</strong>, Johan Verheij Memorial Professor of Law and Director, Center for Business Law and Regulation, Case Western Reserve University<br /> <a href="https://www.cato.org/people/michael-cannon"><strong><br /> Michael Cannon</strong></a>, Director of Health Policy Studies, Cato Institute </p> Wed, 03 Dec 2014 11:43:00 -0500 John A. Allison, Eric O'Keefe, Jonathan H. Adler, Michael F. Cannon https://www.cato.org/events/cato-institute-policy-perspectives-2014-1?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Pruitt, Halbig, King & Indiana: Panel 1 https://www.cato.org/events/pruitt-halbig-king-indiana-panel-1?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Robert Barnes, Jonathan H. Adler, David Ziff, Brianne Gorod, James E. Blumstein <p>In <em>Pruitt v. Burwell</em> and <em>Halbig v. Burwell</em>, federal courts have ruled that the Internal Revenue Service is misinterpreting the Patient Protection and Affordable Care Act, unlawfully paying billions of dollars to private health insurance companies, and unlawfully subjecting more than 50 million individuals and employers to the Act's individual and employer mandates. In <em>King v. Burwell</em>, another federal court found the IRS's interpretation is permissible. A fourth lawsuit, <em>Indiana v. IRS</em>, is due a ruling at any time.</p> <p>While these cases attempt to <em>uphold</em> the ACA by challenging the Obama administration's interpretation, supporters and critics agree they could have as large an impact on the law as any constitutional challenge. Is the IRS acting within the confines of the law? Is the ACA unworkable as written? Is it inevitable that the Supreme Court will hear one of these cases, or a similar challenge yet to be filed? What is the impact of the IRS's (mis)interpretation? What impact would a ruling for the plaintiffs have on the health care sector and the ACA? Leading experts, including the attorneys general behind <em>Pruitt v. Burwell</em> and <em>Indiana v. IRS</em>, will discuss these and other dimensions of this litigation.</p> Thu, 30 Oct 2014 10:40:00 -0400 Robert Barnes, Jonathan H. Adler, David Ziff, Brianne Gorod, James E. Blumstein https://www.cato.org/events/pruitt-halbig-king-indiana-panel-1?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Halbig v. Burwell https://www.cato.org/legal-briefs/halbig-v-burwell-0?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Jonathan H. Adler, Michael F. Cannon <div class="lead text-default"> <p>A brief by Cato director of health policy studies Michael F. Cannon and Case Western Reserve University law professor Jonathan H. Adler filed for the D.C. Circuit's en banc consideration of <em>Halbig v. Burwell</em>. The brief provides new evidence from the Patient Protection and Affordable Care Act's legislative history that confirms the Circuit panel's conclusion that the Internal Revenue Service has no authority to issue "premium assistance tax credits" in states with federal Exchanges, and is violating the Act by doing so. The brief further illustrates how contrary interpretations by the panel's dissent and the Fourth Circuit cannot be reconciled with the statute.</p> </div> Mon, 06 Oct 2014 09:44:00 -0400 Jonathan H. Adler, Michael F. Cannon https://www.cato.org/legal-briefs/halbig-v-burwell-0?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Economists' Arguments against Obamacare Lawsuits Backfire https://www.cato.org/commentary/economists-arguments-against-obamacare-lawsuits-backfire?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Jonathan H. Adler, Michael F. Cannon <div class="lead text-default"> <p>Three years ago, we blew the whistle on the government behavior now being challenged in multiple Obamacare lawsuits, including <em>Halbig v. Burwell and King v. Burwell</em>. We performed much of the legal analysis underpinning those challenges. So it amused us when economists Henry Aaron, David Cutler and Peter Orszag tried to defend the government and counsel against Supreme Court review of King, yet inadvertently undercut the government on both counts.</p> </div> , <div class="text-default"> <p>Contrary to their characterization, plaintiffs Halbig and King do not challenge the Patient Protection and Affordable Care Act, much less attempt to “repeal or invalidate” it. The plaintiffs claim the clear language of the act exempts them from the law’s mandates, yet the government is subjecting them to those taxes anyway. They are asking the government to follow Obamacare, not strike it.</p> <p>Nor are these cases “a joke.” The plaintiffs won before one appellate court (Halbig) and lost before another (King). Even the latter court found “a literal reading of the statute undoubtedly accords more closely with [the plaintiffs’] position,” and the government’s position is “only slightly” stronger.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Agree or disagree, the need for final resolution of these cases is obvious and pressing.</p> </div> </div> </aside> , <div class="text-default"> <p>Nor is the statute “vague.” Obamacare lets the government pay some people’s insurance premiums, and impose its mandate taxes on certain employers and individuals, but only in states with a health-insurance exchange that, quoting the law, was “established by the State.” There is nothing vague about that language, which Congress used repeatedly and consistently. There is nothing in the statute inconsistent with it, or suggesting Congress understood it to mean anything other than what it says. The plaintiffs live among the 36 states that did not establish exchanges. They are exempt from those taxes.</p> <p>Nor does the statute support a contrary interpretation “when read in its entirety.” Tellingly, the economists cite no statutory language authorizing the government to tax the plaintiffs. Nor do they offer contemporaneous statements from the law’s authors supporting their reinterpretation.</p> <p>Nor is the claim that Congress intended to withhold subsidies in those 36 states “absurd.” Withholding federal subsidies in uncooperative states is how Congress sought to induce states to implement Obamacare’s other major coverage expansion, too. As enacted, the legislation threatened to withhold 12 times as much funding — and to deny health coverage to the poorest of the poor — in states that did not expand their Medicaid programs. As we write, Obamacare is revoking exchange subsidies from hundreds of thousands of enrollees based on residency status and income.</p> <p>No Obamacare supporter wanted to take coverage away from the poorest of the poor. Yet not even Mr. Aaron, Mr. Cutler or Mr. Orszag could deny that is precisely how Congress intended the law to operate.</p> <p>Nor is it “absurd” to argue Congress would delink exchanges from the mandates and subsidies necessary to make them work. In court briefs, Mr. Aaron and Mr. Cutler admit Congress did exactly that in all U.S. territories.</p> <p>Another signer of those briefs, the law’s chief architect Jonathan Gruber, further demonstrated the idea’s plausibility when, after the law was enacted but before this provision became a liability, he repeatedly told audiences, “If you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.”</p> <p>In 2010, Mr. Aaron and Mr. Cutler joined dozens of scholars who admitted Obamacare was “imperfect,” but urged reluctant House Democrats to pass it anyway because (1) they thought Obamacare would prove popular, (2) “the allocation of premium subsidies” and “other limitations” of the bill “can be addressed through other means,” and (3) the alternative was no bill at all. Perhaps they believed the bill’s popularity would guarantee Democrats would continue to control Congress and make any needed changes.</p> <p>It didn’t work out that way. Rather than rely on democracy to fix things, the trio is promoting something much worse than a bad health care bill; namely, the creation of new taxes and government subsidies outside the legislative process.</p> <p>The Halbig and King plaintiffs make a startling yet credible case that with each passing month, the government is unlawfully handing billions of taxpayer dollars to private insurance companies, and subjecting more than 50 million Americans to illegal taxes. Agree or disagree, the need for final resolution of these cases is obvious and pressing. Only the Supreme Court can provide it.</p> <p>The government’s allies know the longer it takes to resolve these cases, the more Americans will become dependent on those payments, which will prejudice the courts against the plaintiffs. To avoid prejudice, the Supreme Court should review King immediately, without waiting for lower courts to readjudicate Halbig.</p> </div> Wed, 24 Sep 2014 12:18:00 -0400 Jonathan H. Adler, Michael F. Cannon https://www.cato.org/commentary/economists-arguments-against-obamacare-lawsuits-backfire?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Halbig, King, and ObamaCare: What Happened, and What Happens Next? https://www.cato.org/events/halbig-king-obamacare-what-happened-what-happens-next?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Michael F. Cannon, Jonathan H. Adler, John Maniscalco <p>The Patient Protection and Affordable Care Act says its exchange subsidies, employer-mandate tax, and (to a large extent) its individual-mandate tax may be implemented only "through an Exchange established by the State." Since January, however, the IRS has been implementing those provisions (save the delay of the employer mandate) in the 36 states with exchanges established by the federal government. Four lawsuits have been filed so far challenging the IRS's actions. On July 22, the D.C. Circuit ruled in <em>Halbig v. Burwell</em> that the IRS has no such authority &mdash; in essence, that the Obama administration is violating the law by taxing, borrowing, and spending tens of billions of dollars to encourage people to enroll in ObamaCare. On the same day, the Fourth Circuit issued a conflicting ruling in <em>King v. Burwell</em>, which the plaintiffs have appealed to the Supreme Court. Two scholars who laid the groundwork for these lawsuits will explain what the two courts said, what happens next, and what <em>Halbig</em> and <em>King</em> mean for the nation.</p> Tue, 12 Aug 2014 12:00:00 -0400 Michael F. Cannon, Jonathan H. Adler, John Maniscalco https://www.cato.org/events/halbig-king-obamacare-what-happened-what-happens-next?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Reining in ObamaCare--and the President https://www.cato.org/commentary/reining-obamacare-president?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Michael F. Cannon, Jonathan H. Adler <div class="lead text-default"> <p>A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit—a tribunal second only to the Supreme Court—ruled on Tuesday that the Obama administration broke the law. The panel found that President Obama spent billions of taxpayer dollars he had no authority to spend, and subjected millions of employers and individuals to taxes he had no authority to impose.</p> </div> , <div class="text-default"> <p>The ruling came in <em>Halbig v. Burwell</em>, one of four lawsuits aimed at stopping those unlawful taxes and expenditures. It is a decision likely to have far-reaching repercussions for the health-care law.</p> <p>Because the ruling forces the Obama administration to implement the <a href="http://online.wsj.com/public/page/health-law-rollout.html?lc=int_mb_1001" target="_blank">Affordable Care Act</a> as written, consumers in 36 states would face the full cost of its overpriced health insurance. According to one brief filed in the case, overall premiums in those states would be double what they are under the administration's rewrite, and typical enrollees would see their out-of-pocket payments jump sevenfold. The resulting backlash against how <a href="http://online.wsj.com/public/page/health-law-rollout.html?lc=int_mb_1001" target="_blank">ObamaCare</a> <em>actually</em> works could finally convince even Democrats to reopen the statute.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>Halbig v. Burwell is about determining whether the president, like an autocrat, can levy taxes on his own.</p> </div> </div> </aside> , <div class="text-default"> <p>At its heart, though, <em>Halbig</em> is not just about <a href="http://online.wsj.com/public/page/health-law-rollout.html?lc=int_mb_1001" target="_blank">ObamaCare</a>. It is about determining whether the president, like an autocrat, can levy taxes on his own authority.</p> <p>The president's defenders often concede that he is doing the opposite of what federal law says. Yet he claims that he is merely implementing the law as Congress intended.</p> <p>Such claims should be met with more than the usual skepticism when made by a president who openly advocates unilateral action—"I've got a pen, and I've got a phone"—when the legislative process doesn't produce the result he wants, and when they are made by a president whose expansive view of his powers the Supreme Court has unanimously rejected 13 times. Unfortunately, the abuse of power exposed in <em>Halbig</em> may trump them all.</p> <p>Here's where the president broke bad. The Patient Protection and <a href="http://online.wsj.com/public/page/health-law-rollout.html?lc=int_mb_1001" target="_blank">Affordable Care Act</a> directs states to establish "exchanges" to regulate the sale of health insurance. If a state declines to do so, as 36 states have, the health-care law directs the federal government to "establish and operate such Exchange within the State." But here's the rub: Certain taxpayers can receive subsidized coverage, the law says, if they enroll "through an Exchange established by the State." The law nowhere authorizes subsidies through exchanges established by the federal government.</p> <p>This is common practice. The Medicaid program has operated on the same principle for nearly 50 years. Only residents of cooperating states get assistance. When Congress debated health reform in 2009, both Republicans and Democrats introduced legislation conditioning health-insurance subsidies on states establishing exchanges. Senate Democrats advanced two leading health-care bills. Both allowed federal exchanges to operate without subsidies. One of them became law.</p> <p>The only thing that is uncommon about the Affordable Care Act is that two-thirds of the states refused to comply. Yet federal law is clear, consistent and unambiguous: The Obama administration has no authority to issue subsidies outside "an Exchange established by the State." According to congressional investigators, Treasury Department and Internal Revenue Service personnel even admitted they knew the statute did not authorize them to dispense subsidies in states with exchanges established by the federal government. Yet the IRS still promulgated a rule authorizing subsidies in states with federal exchanges.</p> <p>We were the first to draw attention to the president's actions, on these pages in November 2011. In January 2014, despite years of criticism from members of Congress and others, the Obama administration began spending taxpayer dollars to buy coverage for an estimated five million people who enrolled through federal exchanges. If eight million people enrolled in federal-exchange coverage, as we are told they have, it is because the president was unlawfully subsidizing more than half of them.</p> <p>Subsidies for policies purchased on an exchange automatically trigger taxes against both employers and individuals who do not purchase the mandated level of coverage. So when the president issued those subsidies in states where he had no authority to do so, he also imposed, on millions of employers and individuals, taxes that no Congress ever authorized. Two states, dozens of public-school districts, and several private-sector employers and individual taxpayers filed <em>Halbig</em> and three other lawsuits to block that unlawful spending and the illegal taxes it triggers.</p> <p>The president's supporters claim that <em>Halbig</em> is meritless because Congress clearly intended to authorize subsidies through federal exchanges. If that were Congress's intent, certainly one should be able to find some statutory language to that effect. Or contemporaneous quotes from the law's authors explaining that they intended the Affordable Care Act to authorize subsidies in federal exchanges. The president's supporters have had three years to find such evidence supporting their theory of congressional intent. They have come up empty.</p> <p>The administration's legal strategy is therefore, of necessity, bizarre. The president's representatives argue in court that Congress intended to use the words limiting subsidies to exchanges "established by the State," and intended to authorize subsidies through exchanges established by the federal government, without ever explicitly reconciling the contradiction. Also on Tuesday, the Fourth Circuit Court of Appeals upheld the Internal Revenue Service rule as a permissible interpretation of an ambiguous statute, as if there were anything ambiguous about the difference between a state and the federal government.</p> <p>The D.C. Circuit saw through this nonsense. One by one, it rejected the government's many arguments. The court held the Affordable Care Act "does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges" and "the government offers no textual basis ... for concluding that a federally-established Exchange is, in fact or legal fiction, established by a state." The administration's decision to issue those subsidies anyway is thus contrary to the statute and "gives the individual and employer mandates ... broader effect than they would have" if the government followed the law.</p> <p>While the dissent in <em>Halbig</em> highlighted the plaintiff's motives, the majority opinion came from Judge Thomas B. Griffith, whose nomination in 2005 was supported by prominent Democrats including Seth Waxman, David Kendall, and even then-Sen. <a href="http://topics.wsj.com/person/O/Barack-Obama/4328?lc=int_mb_1001" target="_blank">Barack Obama</a>. Judge Griffith noted that while the court's ruling could have a significant impact on the Affordable Care Act, "high as those stakes are, the principle of legislative supremacy that guides us is higher still."</p> </div> Fri, 25 Jul 2014 09:40:00 -0400 Michael F. Cannon, Jonathan H. Adler https://www.cato.org/commentary/reining-obamacare-president?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Learning How to Fish https://www.cato.org/spring-2014/learning-how-fish?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Fri, 04 Apr 2014 16:35:00 -0400 Jonathan H. Adler, Nathaniel Stewart https://www.cato.org/spring-2014/learning-how-fish?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss King v. Sebelius https://www.cato.org/legal-briefs/king-v-sebelius?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Jonathan H. Adler, Michael F. Cannon <div class="lead text-default"> <p>The Patient Protection and Affordable Care Act of 2010 ("PPACA" or "Act") provides "premium assistance tax credits" for the purchase of qualifying health insurance plans in health insurance Exchanges established by states under PPACA Section 1311, 42 U.S.C. § 18031. The Internal Revenue Service rule purporting to implement those premium-assistance tax credits is contrary to the plain language of the PPACA and cannot be justified on other grounds. The rule exceeds the agency's authority and subverts congressional intent by subverting the balance Congress struck between the Act's competing goals.</p> </div> , <div class="text-default"> <p>The PPACA mandates the creation of health insurance "exchanges" to regulate health insurance within each state; declares that "Each State shall .. establish" an Exchange; directs the federal government to establish one in states that do not; and offers health insurance subsidies to certain qualified taxpayers who enroll in a qualified health plan "through an Exchange established by the State under Section 1311." This language originated in the Senate Finance Committee, was clarified and strengthened thereafter in the Senate, and was approved by both chambers of Congress and the President. The legislative history of the PPACA is fully consistent with the plain text of these provisions.</p> <p>The authors of the PPACA conditioned premium-assistance tax credits on states establishing Exchanges to induce state cooperation. Specifically, to avoid "commandeering" the states, the PPACA's authors offered premium-assistance tax credits as one among a number of financial inducements for states to perform this task for the federal government. Congress routinely conditions federal benefits to individuals-both via direct spending and the tax code- on their states' carrying out congressional priorities. Indeed, conditioning premium-assistance tax credits on states' establishing Exchanges (and enacting other health insurance measures) is far from the largest financial inducement that Congress created for states in the PPACA.</p> <p>Contrary to the clear language and purpose of the statute, and without any reasoned basis, the IRS rule attempts to dispense premium-assistance tax credits in the 34 states that have opted not to establish an Exchange. Under the PPACA, those tax credits directly trigger penalties against employers and indirectly (but no less clearly) trigger penalties against individual taxpayers. The IRS rule therefore has the effect of triggering spending and imposing financial penalties that Congress never authorized. On that basis, the Plaintiffs' challenge to that rule should be sustained.</p> </div> Wed, 27 Nov 2013 12:16:00 -0500 Jonathan H. Adler, Michael F. Cannon https://www.cato.org/legal-briefs/king-v-sebelius?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Halbig v. Sebelius https://www.cato.org/legal-briefs/halbig-v-sebelius?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Jonathan H. Adler, Michael F. Cannon <div class="lead text-default"> <p>The Patient Protection and Affordable Care Act of 2010 (“PPACA” or “Act”) provides “premium assistance tax credits” for the purchase of qualifying health insurance plans in health insurance Exchanges established by states under PPACA Section 1311, 42 U.S.C. § 18031. The Internal Revenue Service rule purporting to implement those premium-assistance tax credits is contrary to the plain language of the PPACA and cannot be justified on other grounds. The rule exceeds the agency’s authority and subverts congressional intent by subverting the balance Congress struck between the Act’s competing goals.</p> </div> , <div class="text-default"> <p>The PPACA mandates the creation of health insurance “exchanges” to regulate health insurance within each state; declares that “Each State shall .... establish” an Exchange; directs the federal government to establish one in states that do not; and offers health insurance subsidies to certain qualified taxpayers who enroll in a qualified health plan “through an Exchange established by the State under Section 1311.” This language originated in the Senate Finance Committee, was clarified and strengthened thereafter in the Senate, and was approved by both chambers of Congress and the President. The legislative history of the PPACA is fully consistent with the plain text of these provisions.</p> <p>The authors of the PPACA conditioned premium-assistance tax credits on states establishing Exchanges to induce state cooperation. Specifically, to avoid “commandeering” the states, the PPACA’s authors offered premium-assistance tax credits as one among a number of financial inducements for states to perform this task for the federal government. Congress routinely conditions federal benefits to individuals—both via direct spending and the tax code— on their states’ carrying out congressional priorities. Indeed, conditioning premium-assistance tax credits on states’ establishing Exchanges (and enacting other health insurance measures) is far from the largest financial inducement that Congress created for states in the PPACA.</p> <p>Contrary to the clear language and purpose of the statute, and without any reasoned basis, the IRS rule attempts to dispense premium-assistance tax credits in the 34 states that have opted not to establish an Exchange. Under the PPACA, those tax credits directly trigger penalties against employers and indirectly (but no less clearly) trigger penalties against individual taxpayers. The IRS rule therefore has the effect of triggering spending and imposing financial penalties that Congress never authorized. On that basis, the Plaintiffs’ challenge to that rule should be sustained.</p> </div> Mon, 18 Nov 2013 11:38:00 -0500 Jonathan H. Adler, Michael F. Cannon https://www.cato.org/legal-briefs/halbig-v-sebelius?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Making Fisheries Sustainable https://www.cato.org/daily-podcast/making-fisheries-sustainable?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Thu, 22 Aug 2013 11:53:00 -0400 Jonathan H. Adler https://www.cato.org/daily-podcast/making-fisheries-sustainable?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits under the PPACA https://www.cato.org/taxation-without-representation-illegal-irs-rule-expand-tax-credits-under-ppaca?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Mon, 18 Mar 2013 10:21:00 -0400 Jonathan H. Adler, Michael F. Cannon https://www.cato.org/taxation-without-representation-illegal-irs-rule-expand-tax-credits-under-ppaca?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Could Oklahoma's New Lawsuit Strike a Fatal Blow to Obamacare? https://www.cato.org/events/could-oklahomas-new-lawsuit-strike-fatal-blow-obamacare?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Jonathan H. Adler, Michael F. Cannon, Laura Odato Oklahoma Attorney General Scott Pruitt has filed a lawsuit alleging the Obama administration is violating the Patient Protection and Affordable Care Act and imposing illegal taxes in states such as Oklahoma. As Jonathan H. Adler and Michael F. Cannon detail in their forthcoming <em>Health Matrix</em> article, "<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2106789" target="_blank">Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits under the PPACA</a>," the PPACA cannot function without state buy-in. The Obama administration's response to state push-back has been to rewrite the statute by imposing, on both employers and individuals, taxes that Congress never authorized. Pruitt is challenging the IRS rule that imposes those illegal taxes. Supporters and opponents agree the PPACA's "<a href="http://healthaffairs.org/blog/2012/07/18/tax-credits-in-federally-facilitated-exchanges-are-consistent-with-the-affordable-care-acts-language-and-history/">entire structure</a>" depends on the IRS's interpretation of the statute, and that this dispute "<a href="http://healthblog.ncpa.org/this-could-be-a-fatal-blow-to-obamacare/">could be a fatal blow to Obamacare</a>." Tue, 16 Oct 2012 20:00:00 -0400 Jonathan H. Adler, Michael F. Cannon, Laura Odato https://www.cato.org/events/could-oklahomas-new-lawsuit-strike-fatal-blow-obamacare?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss The IRS Has Gone Rogue https://www.cato.org/commentary/irs-has-gone-rogue?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Michael F. Cannon, Jonathan H. Adler <div class="lead text-default"> <p>A president who says “I haven’t raised taxes” has authorized his Internal Revenue Service issue a “<a href="http://www.gpo.gov/fdsys/pkg/FR-2012-05-23/pdf/2012-12421.pdf" target="_blank">final rule</a>” that will illegally tax some 12 million individuals, plus large employers, in as many as 40 states beginning in 2014. Oklahoma’s attorney general has <a href="https://www.cato.org/oklahoma-challenges-obamas-illegal-employer-tax/" target="_blank">asked</a> a federal court to block this rule. Members of Congress have introduced legislation in both the <a href="http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HJ00112:%7C/bss/%7C" target="_blank">House</a> and the <a href="http://thomas.loc.gov/cgi-bin/bdquery/D?d112:5:./temp/~bd59Db::%7C/bss/%7C" target="_blank">Senate</a> to quash it.</p> </div> , <div class="text-default"> <p>At first glance, it might not seem that the IRS is up to anything nefarious. The rule in question concerns the Patient Protection and Affordable Care Act’s tax <em>credits</em>, not the law’s tax increases. The tax credits are intended to offset the cost of insurance premiums for low- and middle-income workers.</p> <p>For many Americans, however, those tax credits are like an anchor disguised as a life vest. The mere fact that a taxpayer is <em>eligible</em> for a tax credit can trigger tax liabilities against both the taxpayer (under the act’s “individual mandate”) and her employer (under the “employer mandate”). In 2016, these tax credits will trigger a tax of $2,085 on many families of four earning as little as $24,000. An employer with 100 workers could face a tax of $140,000 if even one of his workers is eligible for a tax credit.</p> <p>So it is significant that the PPACA explicitly and repeatedly restricts eligibility for tax credits to people who purchase health insurance “through an Exchange [i.e., government agency] established by the state” in which they live. That means that under the statute Congress enacted, a state can block those hefty taxes simply by declining to create an exchange. The PPACA directs the federal government to create an exchange in any state that declines to create one itself, and Health and Human Services secretary Kathleen Sebelius <a href="https://www.politicopro.com/go/?id=9220" target="_blank">estimates</a> she may have to do so in as many as 30 states. (Some experts put the number <a href="http://www.politico.com/news/stories/0512/76596.html" target="_blank">closer to 40</a>.) However, because the statute withholds tax credits in federal exchanges, the creation of a federal exchange does not trigger tax liabilities. <a href="http://www.kff.org/healthreform/upload/8213-2.pdf" target="_blank">By</a> <a href="http://www.statehealthfacts.org/comparetable.jsp?typ=1&amp;ind=136&amp;cat=3&amp;sub=40" target="_blank">our</a> <a href="http://www.kff.org/healthreform/upload/7971.pdf" target="_blank">count</a>, as many as 12 million low- and middle-income Americans would be exempt from those taxes, including 250,000 Oklahomans.</p> <p>It is here that the IRS has gone rogue. The agency has announced that, despite the clear statutory language restricting tax credits to exchanges established by states, it will issue tax credits through <em>federal</em> exchanges. One can see why Oklahoma and the rest might be upset: By offering tax credits in states that opt not to create exchanges, the IRS is imposing taxes where Congress did not authorize them. This IRS rule will tax those 12 million low- and middle-income Americans, including 250,000 Oklahomans, contrary to the express language of the PPACA.</p> <p>Defenders of the rule <a href="http://healthaffairs.org/blog/2012/07/18/tax-credits-in-federally-facilitated-exchanges-are-consistent-with-the-affordable-care-acts-language-and-history/" target="_blank">claim</a> that Congress intended the tax credits to be available in all exchanges. But is that true?</p> <p>It may come as a surprise to supporters of the PPACA, as it did to us, but all the evidence that has surfaced to date shows that Congress restricted and, yes, intended to restrict tax credits to state-created exchanges. What the IRS is doing is illegal.</p> <p>We examine the evidence in our forthcoming <em>Health Matrix</em> article, “<a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2106789" target="_blank">Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA</a>.” Here are a few highlights, including some material that is not included in our article.</p> <p><strong>1. The text of the PPACA is unambiguous</strong>.</p> <p>The Supreme Court <a href="http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&amp;vol=503&amp;invol=249" target="_blank">explained</a>in <em>Connecticut National Bank v. Germain</em> that when a court is trying to divine congressional intent, the most important factor is the text of the statute:</p> </div> , <blockquote class="blockquote"> <div> <p>In interpreting a statute a court should always turn first to one cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there... When the words of a statute are unambiguous, then, this first canon is also the last: judicial inquiry is complete.</p> </div> </blockquote> <cite> </cite> , <div class="text-default"> <p>Using that canon as its guide, the Congressional Research Service <a href="http://op.bna.com/hl.nsf/id/shad-8wsp4k/$File/CRS%20legal%20analysis%20of%20Premium%20tax%20credits%20in%20Federal%20Exchanges%20(07.23.12).pdf" target="_blank">writes</a> this about the text of the PPACA’s tax-credit provisions:</p> </div> , <blockquote class="blockquote"> <div> <p>A strictly textual analysis of the plain meaning of the provision would likely lead to the conclusion that the IRS’s authority to issue the premium tax credits is limited only to situations in which the taxpayer is enrolled in a state-established exchange.</p> </div> </blockquote> <cite> </cite> , <div class="text-default"> <p>Not convinced? You’re not alone. The CRS explained that courts might uphold the IRS rule if they were “willing to engage in a searching statutory interpretation involving text, context, legislative purpose, and legislative history.” So let’s look at context, legislative purpose, and legislative history.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>By offering tax credits in states that opt not to create exchanges, the IRS is imposing taxes where Congress did not authorize them.</p> </div> </div> </aside> , <div class="text-default"> <p><strong>2. Every health-care overhaul advanced by Senate Democrats denied premium assistance to residents of non-compliant states.</strong></p> <p>The PPACA’s language restricting tax credits to state-created exchanges came almost verbatim from a <a href="http://www.gpo.gov/fdsys/pkg/BILLS-111s1796pcs/pdf/BILLS-111s1796pcs.pdf" target="_blank">bill</a> reported by the Senate Finance Committee.</p> <p>Senate Democrats’ other leading <a href="http://www.gpo.gov/fdsys/pkg/BILLS-111s1679pcs/pdf/BILLS-111s1679pcs.pdf" target="_blank">health-care bill</a> emerged from the Health, Education, Labor, and Pensions Committee. The HELP bill allowed premium assistance through federal exchanges (called “gateways”) in certain circumstances. But if a state refused to assist with implementation, the HELP bill denied premium-assistance subsidies to that state’s residents. And if a state fell out of compliance, the HELP bill explicitly revoked these subsidies from residents who were already receiving them.</p> <p>Harsh? Perhaps. But this legislative history shows that denying premium assistance to residents of non-compliant states was not some beyond-the-pale idea that Congress could not possibly have intended, but was instead the dominant approach in the Senate; <em>every</em> bill Senate Democrats advanced contained this feature. The HELP bill also suggests a legislative purpose behind the language: to encourage states to implement the law.</p> <p><strong>3. During Senate consideration, the PPACA’s lead author admitted that the bill made tax credits conditional on state compliance.</strong></p> <p>Finance Committee chairman Max Baucus (D., Mont.) was the chief sponsor and lead author of the Finance bill. He shepherded it through committee consideration and through negotiations with Obama-administration officials and congressional leaders, and he can reasonably claim to be the man most responsible for the relevant language of the PPACA.</p> <p> During a September 23, 2009, committee markup of his bill, Baucus acknowledged that restricting tax credits to policies purchased through state-created exchanges was the reason the Finance Committee had jurisdiction to direct states to establish exchanges, making this language an essential part of the bill. (Again, the Finance bill’s language restricting premium assistance to state-created exchanges was adopted without substantive change in the PPACA.) The admission came amid a debate over the committee’s jurisdiction. Baucus had ruled an amendment dealing with medical malpractice out of order on the grounds that the Finance Committee did not have jurisdiction to legislate in that area. Sensing a double standard, Senator John Ensign (R., Nev.) challenged Baucus. The Finance Committee, Ensign said, did not have jurisdiction to direct states to change their laws regarding health-insurance coverage or to establish exchanges — such matters fall within the jurisdiction of the HELP Committee — yet the Baucus bill did both. If the Finance Committee could not consider a medical-malpractice amendment, Ensign asked, then how could it direct states to create exchanges? For Baucus’s response, <a href="http://youtu.be/lC3lxb2WBYo" target="_blank">we go to the tape</a>: </p> <p></p> <div class="responsive-embed"></div><p></p> <p>Baucus responded that the Finance Committee had jurisdiction because his bill offered tax credits to individuals on the condition that their states complied with the bill’s health-insurance provisions: “Taxes are in the jurisdiction of this committee”; “An exchange is essentially [where individuals can access] tax credits”: “There are conditions to participate in the exchange.” To place “conditions” on tax credits, of course, presumes a scenario in which they are not available.</p> <p>It is worth mentioning that this is the only bit of context or legislative history that anyone has found that directly addresses the question of whether the PPACA authorizes tax credits in federal exchanges. And it highlights an additional legislative purpose that is important enough to count separately.</p> <p><strong>4. Restricting tax credits to state-created exchanges was an essential feature of the bill.</strong></p> <p>The conditional nature of the tax credits is what gave the Finance Committee a jurisdictional hook to legislate in this area. The need for that hook may have disappeared when the bill reached the Senate floor. But the language restricting tax credits to state-run exchanges did not.</p> <p><strong>5. House Democrats knew the Senate bill empowered states to block residents from “receiv[ing] any benefit.”</strong></p> <p>By early January 2010, Democrats were trying to iron out a compromise between the House and Senate bills that could clear both chambers. On January 11, eleven House Democrats from the Texas delegation sent a <a href="http://www.myharlingennews.com/?p=6426" target="_blank">letter</a> to President Obama, House Speaker Nancy Pelosi (D., Calif.), and House Majority Leader Steny Hoyer (D., Md.). They demanded “a single, national health insurance exchange, as adopted by the House,” rather than the Senate bill’s “weak, state-based health insurance exchanges.” The Senate bill “relies” on states to implement exchanges, they warned, even though “a number of states opposed to health reform have already expressed an interest in obstruction.”</p> <p>To emphasize the dangers of the Senate bill, they noted that Texas officials had recently turned down health-care subsidies that Congress had made available under another law. As a result, they wrote, not a single Texas resident “has yet received any benefit” from that law. “The Senate approach,” they wrote, “would produce the same result — millions of people will be left no better off than before Congress acted.”</p> <p>The Texas Democrats made no explicit mention of how the Senate bill restricted tax credits to states that created their own exchanges, yet they clearly saw a difference between state-created and federal exchanges under the Senate bill — a difference that would leave people in recalcitrant states without the assistance that residents of compliant states would receive.</p> <p>So far, we’ve got the following context pointing to the conclusion that the IRS’s decision to offer tax credits through federal exchanges violates congressional intent: (1) the unambiguous text of the statute, (2) evidence that making tax credits conditional on state compliance was the dominant approach in the Senate, (3) an affirmation by the law’s primary author that the Finance bill’s language was deliberate and (4) essential, and (5) evidence that House Democrats understood the Senate bill would withhold benefits from non-compliant states. But even if we didn’t have items (2) through (5)...</p> <p><strong>6. By enacting the PPACA, supporters revealed that their true intent was to enact whatever the Senate bill contained.</strong></p> <p>On January 19, 2010 — eight days after the Texas Democrats’ letter — Massachusetts voters elected Republican Scott Brown to the Senate, in part because of his pledge to be the 41st vote Senate Republicans needed to filibuster any compromise health-care bill. On that day, Massachusetts voters killed the House bill and its approach to exchanges, leaving House Democrats with only two options: Either they could pass the Senate bill and hope to obtain limited amendments through the “reconciliation” process, or they would fail to pass a bill at all. When House Democrats approved the PPACA, they revealed that their intent was to restrict tax credits to state-created exchanges, because they preferred that option to failure. They decided that whatever the Senate bill’s approach to premium assistance, it was better than no premium assistance at all.</p> <p>If federal courts do enough searching, they will surely find lots of PPACA supporters who wanted subsidies in federal exchanges, just as lots of them wanted a “public option.” But those possibilities died the day Massachusetts voters sent Scott Brown to the Senate. No matter what else PPACA supporters may have <em>wanted</em> to enact, their approval of the Senate language reveals they <em>intended</em> to restrict tax credits to state-created exchanges. If offering premium assistance through federal exchanges had been their intent, they would have put the House bill up for a vote in the Senate, rather than the other way around.</p> <p>The text, context, legislative purpose, and legislative history of the PPACA all demonstrate that Congress did not intend to offer tax credits — nor to tax the aforementioned individuals and employers to help cover that cost — in states that declined to create exchanges. Evidence that the IRS’s disputed final rule violates the law <em>and</em> congressional intent has been mounting ever since we brought attention to this issue <a href="http://online.wsj.com/article/SB10001424052970203687504577006322431330662.html" target="_blank">last year</a>. It has continued to mount even since we <a href="http://www.usatoday.com/news/opinion/forum/story/2012-06-24/obamacare-healthcare-supreme-court-unconstitutional/55796730/1" target="_blank">wrote</a> in June, “The IRS doesn’t have a leg to stand on here.” This mounting evidence has forced supporters of the rule to <a href="http://healthaffairs.org/blog/2012/08/01/the-illegal-irs-rule-to-expand-tax-credits-under-the-ppaca-a-response-to-timothy-jost/" target="_blank">change their story</a> a number of times, yet their new and improved defenses of the rule are inadequate and even self-contradictory. The IRS has gone rogue, taxing individuals and employers without statutory authority, and it deserves a swift rebuke from the federal courts.</p> </div> Wed, 26 Sep 2012 00:00:00 -0400 Michael F. Cannon, Jonathan H. Adler https://www.cato.org/commentary/irs-has-gone-rogue?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Panel II: Increasing Protections for Property Rights https://www.cato.org/events/panel-ii-increasing-protections-property-rights?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss Tue, 18 Sep 2012 07:00:00 -0400 Roger Pilon, Damien M. Schiff, Jonathan H. Adler, Ilya Somin https://www.cato.org/events/panel-ii-increasing-protections-property-rights?utm_source=author&amp%3Butm_medium=rss&amp%3Butm_campaign=rss