Originalism and the IRS

Apparently the IRS doesn't think any more of altering the law by executive fiat than the Labor Department. It creates an interesting question.
A July 18 report by the Cato Institute’s Michael Cannon has revealed a critical flaw in the Obamacare law that could ultimately prove to be its undoing. Namely, if states refuse to set up an insurance exchange under the law, the federal government lacks authorization to dispense some $800 billion in subsidies through a federally operated exchange.

This is important because, coupled with states’ option to implement the Medicaid expansion or not, it appears the key player in defunding Obamacare going forward will be the states. The Supreme Court ruling on Obamacare found that the law’s mandatory Medicaid expansion was unconstitutional, effectively giving states an opt-out provision that many now plan to take.

In short, if states refuse to expand Medicaid, and there is no funding for the insurance exchanges, Obamacare will effectively be defunded.

To deal with this flaw, the Internal Revenue Service (IRS) on May 24 simply issued a regulation effectively rewriting the law that would allow the federal government to fund the exchanges.
On the one hand, clearly the Democrats who passed the ACA never even thought of the possibility that the States would simply refuse to play along. Congressional intent -- at least Democratic Congressional intent, since no Republicans voted for the ACA -- was that these exchanges should exist, and be government-funded. It's easy to imagine that, if they had realized the States might not play along, the Democratic Congress who passed the ACA would have included authority for the Federal government to do it instead.

The problem is, the law doesn't say that the Federal government can do it. There's no authority in the statute, and the Congress that approved the ACA doesn't exist any more. It was explicitly rejected by the People in 2010's landslide elections. The current Congress wouldn't approve this change to the law.

So... is the IRS doing the right thing, following the original Congress' apparent intent by revising the law on the fly in a way that older Congress would have approved? Or is it violating the separation of powers by not deferring the legislative question to the current Congress, or to the next one?


MikeD said...

Given that the SCOTUS ruled that the law did not allow the Federal government to punish the states if they opted out, I think it's safe to say that it was the INTENT of congressional democrats to fund it (on the backs of the states). But I also think it's clear that the SCOTUS wouldn't have allowed that if they ruled that the Feds COULDN'T punish the states. To go in by executive fiat and "re-write" the law puts it squarely in the SCOTUS' sites for re-evaluation and (in my guesstimation) killing.

Grim said...

But the same SCOTUS did a similar thing by reinterpreting the mandate as a "tax." Right?

Texan99 said...

Roberts didn't win my confidence by his sleight of hand the last time round, but that's not to say he won't reach his limit at some point. I'd like to see this tested in court. When laws are passed with razor-thin majorities in the face of public disapproval, they ought to be subjected to the most rigorous standards, not protected from the necessity to expose themselves to a new vote.

Grim said...

When laws are passed with razor-thin majorities in the face of public disapproval, they ought to be subjected to the most rigorous standards...

That sounds like a reasonable principle to me: is it consistent with Originalism? "Your original intent for the law was clearly X, however, we notice that you got voted out the next week by an angry mob with pitchforks. Therefore the court will apply a stricter standard..."

Texan99 said...

Good point. Better to say that laws should be scrutinized all the time. If they contain a mistake, Congress can fix them. If the requisite votes are no longer there, tough.