The further to the left or the right you move, the more your lens on life distorts.

Tuesday, February 11, 2014


It seems that almost every month, the current administration actively violates the law in two ways: (1) it unilaterally makes modifications to existing law (without Congressional approval), and (2) it co-opts theoretically independent federal agencies (e.g., the IRS, the U.S Treasury) into actions and rulings that are intended to improve political atmospherics or, even worse, provide distinct partisan political advantage.

The first instance has become so common that it's expected. Barack Obama has again delayed the ACA employer mandate—conveniently until after the 2014 election and by all intents and purposes, until after the 2016 election. There is every reason to believe that these actions are either unconstitutional or so close that no ethical administration would pursue them, but this is a different breed of administration, so ho-hum. It is a tacit admission that the Obamacare law Obama championed and that Democrats crafted in a rabidly partisan manner is deeply flawed, but ho-hum. From the media—general reporting, but no substantive questions and little meaningful commentary.

The second instance is exemplified by the IRS scandal—the weaponization of a federal agency against Obama's opponents. It just won't go away, and I suspect, there will be more revelations as the year goes on. Of course, Obama's trained hamsters in the media are actively disinterested. Obviously, there isn't a "smidgen' of concern on their part.

But the IRS scandal—as corrupt and intrusive as it is—is but one example of the second instance. Today, Michael F. Cannon of published a detailed expose of still another instance in which the Obama administration co-opts federal agencies to circumvent the law. He writes:
Last week, two congressional committees issued a little-noticed report detailing how Treasury Department, Internal Revenue Service, and Health and Human Services officials conspired to create a massive new entitlement not authorized anywhere in federal law.
The details are VERY wonky and will therefore preclude serious media attention, but here's a summary:
In early 2011, Treasury and IRS officials realized they had a problem. They unanimously believed Congress had intended to authorize certain taxes and subsidies in all states, whether or not a state opted to establish a health insurance “exchange” under the Patient Protection and Affordable Care Act. At the same time, agency officials recognized: (1) the PPACA plainly does not allow those taxes and subsidies in non-establishing states; (2) the law’s legislative history offers no support for their theory that Congress intended to allow them in non-establishing states; and (3) Congress had not given the agencies authority to treat non-establishing states the same as establishing states.

Nevertheless, agency officials agreed, again with apparent unanimity, to impose those taxes and dispense those subsidies in states with federal Exchanges, the undisputed plain meaning of the PPACA notwithstanding. Treasury, IRS, and HHS officials simply rewrote the law to create a new, unauthorized entitlement program whose cost “may exceed $500 billion dollars over 10 years.” (My own estimate puts the 10-year cost closer to $700 billion.)

Finally, what little research the agencies performed on Congress’ intent was neither ”serious” nor “thorough,” and appears to have occurred after after agency officials had already made up their minds. For example, Treasury and IRS officials were unaware of numerous elements of the statute and legislative history that conflicted with their theory of Congress’s intent and supported the plain meaning of the statute.
In layman's terms, the aforementioned agencies circumvented clear legal prohibition against an agency rewriting federal law and did so with the encouragement and approval of the Obama administration. Ho-hum.

The details are striking and for additional exposition, read the full Report. Here's a summary:
According to investigators, shortly after McMahon Acting Assistant Secretary, US Dept of Treasury] learned that the existing legislative language “established by the State under section 1311” appears in the statute, it disappeared from the IRS’s draft regulations. It was replaced with language permitting tax credits to be issued through federal Exchanges.

That seemingly minor change is significant for several reasons.

First, the IRS doesn’t have the authority to issue tax credits on its own, and Congress clearly authorized these credits only in specific circumstances.

Second, these “tax credits” are actually cash payments that the IRS sends straight to private health insurance companies.

Third, the tax credits trigger a host of other measures, including additional subsidies as well as penalties against both individuals and employers who fail to purchase adequate coverage. If a state doesn’t establish an Exchange, no tax credits are allowed, and those employers and individuals are explicitly exempt from such penalties. But when the IRS issues unauthorized tax credits in those states, it subjects individuals and employers to illegal penalties.

Again, this is happening right now, in 34 states accounting for two-thirds of the U.S. population. By my estimate, over 10 years this seemingly innocuous change will result in the IRS taxing, borrowing, and spending a staggering $700 billion more than the PPACA allows, which is almost as much as the PPACA’s initial price tag. All for no more reason than a few unelected bureaucrats felt like it. I wish that were an exaggeration.
This kind of inside legislative baseball makes the normal citizen's eyes glaze over, but understand that it results in the shrinking pools of taxpayers subsidizing insurance companies without legislative mandate.

It's the sort of thing that happens regularly in a banana republic, but not the United States. Until now. Ho-hum.