Supreme Court About to Decide Fate of Obamacare

Should the government be barred from paying subsidies to persons buying health insurance because seven words in the 602-page Affordable Care Act fail to Court OKs Subsidies: June 25: In exactly the 6-3 split that the adjacent article forecast, the Supreme Court has validated the federal government’s paying subsidies to those who sign up on the federal exchanges. The justices’ logic matches what we set forth here.
    

mention federal exchanges? Or do other sections of the statute show that phrase to be only a lapse in wording?

So argue the briefs before the Supreme Court in King v. Burwell, the long-awaited case that could cripple Obamacare. The Supreme Court is expected to render its verdict as soon as this Friday.

THE FINE PRINT

For the 34 states unwilling to mount their own exchange, the Affordable Care Act (ACA) provides for the federal government to establish and manage an exchange in their behalf. The text then says that subsidies are to be granted to low-income people who sign up for insurance “through an Exchange established by the State”. Missing is any explicit wording that says the federal government is also authorized to pay subsidies to persons who sign up on the exchanges it runs.

A drafting error, say those who insist the mission is the same no matter who administers the exchanges. The obvious intent is for all Americans to be treated equally.

A decision that prohibits the federal government from issuing subsidies to those who signed up on the exchanges it runs would sink Obamacare, which is precisely the objective of the group that searched the Act for an Achilles heel, found those seven words, and sued the government. If denied those subsidies, an estimated eight million could no longer afford the insurance, with only the sickest paying no matter the cost, meaning the insurers will need to spiral premium costs upward to pay for the care of these most expensive policy holders, and that will drive still more people into the uninsured column. This is the downward “death spiral” that the petitioners hope will kill Obamacare.

REACHING FOR IT

It was highly unusual and suspect that the Supreme Court reached for King v. Burwell, in which the 4th Circuit Court of Appeals in Virginia had approved the federal payment of subsidies. There had been no split rulings at the circuit level to cause the highest court to step in.

In a second challenge to the federal subsidies, Halbig v. Burwell, a three-judge panel of the Washington D.C. Circuit Court of Appeals had reached the opposite decision, ruling that the federal-run exchanges could not pay subsidies because of the seven words. But that court had vacated its own ruling, deciding that the case should be heard en banc, that is, by all the judges of that court.

That left King as the only ruling out there when the Supreme Court jumped the line, taking King for itself and thus aborting the D.C. court’s review of Halbig.

What was that about? Were the conservative justices wary that seven of D.C.’s eleven judges were appointed by Democratic presidents and might be disposed to rule in favor of the subsidies? If both cases were decided for the administration, the Supreme Court would have no justification to intervene.

This has happened before. It is a reminder of a similar moment when the justices reached well beyond a complaint about a corporate-funded political movie brought by the conservative advocacy organization Citizens United in order to advance a political agenda of unlimited campaign spending by corporations and unions. It’s hard not to suspect that the conservative justices again reached for a case because they wanted another crack at Obamacare.

THE CHALLENGE

The King brief relies on the seven words in isolation, in proving that they were deliberate, that the federal government was to be denied issuing subsidies. The intent was to force states to set up their own exchanges.

The brief uses as evidence newspaper articles such as The New York Times saying in 2012 that “lawmakers assumed that every state would set up its own exchange” because “political reality” would deter them from turning down “billions” of free federal dollars. The brief cites Jonathan Gruber, an MIT professor and heavily paid consultant involved in crafting the healthcare bill, who had popped up in videos calling Americans “stupid” for not figuring out that the young and healthy insurance buyers would be paying for the old and sick, but relative to this case had said,

“If you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits.… 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, and that they’ll do it.”

Plaintiffs argue that it is not exceptional for the government to bestow its largesse only in return for states complying with a federal requirement; one need look no further than Medicaid within the Affordable Care Act itself. The states get 100% funding to cover new applicants for three years, but only if they expand the number of recipients.

Gruber notwithstanding, King’s contention that Congress deliberately attempted to coerce the states finds no corroboration from anyone in Congress. If denying subsidies to any state that failed to set up its own exchange had been the expressed intent, would we not have heard of furious arguments in Congress as the bill was formed and debated? Yet there was none. Jeffrey Toobin at the New Yorker says there were 53 meetings of the Senate Finance Committee, seven days of committee debate on amendments, and 25 consecutive days spent by the full Senate on the bill — “the second-longest session ever on a single piece of legislation” — with “similar marathons in the House”. Yet in all those deliberations there was no uproar because no one proposed that the subsidies were to be available only on the state exchanges.

THE DEFENSE

The government argues that, given the Court’s own prior pronouncements, the full text of a statute must be taken into consideration — so-called “textualism”. “When we look at a provision of law, we look at the entire provision of the law,” said Justice Antonin Scalia early this year. “We try to make sense of the law as a whole”. Briefs cite his quotes as well as his emphasis on textualism in books he authored. “The interpretation of a law should do least violence to the text”, Scalia has written. In a post on SCOTUSblog, Yale Law School Professor Abbe Gluck said the “textualists” on the Court like Scalia “have spent three decades convincing judges of all political stripes” to adopt holistic readings of the law, giving priority to the full text. Says one brief, “Textualism demands that judges take seriously the statutory design (as gathered from the text) and avoid interpretations that would render the statute unworkable”.

The government points to several places in the law that contradict the seven words with wording that assumes the federal government will be paying subsidies. Examples:

The same section that purportedly limits subsidies to states that create their own exchanges calls for both state and government exchanges to provide the IRS with the information it needs to administer the subsidies (they take the form of tax credits). Why would the government exchanges be required to provide that information if none of its customers are eligible for such credits?

The government contends that an exchange it creates for a state is “established by the state”, with the government acting in its behalf. Section 1321 prescribes that Health and Human Services “shall…establish and operate such Exchange within the State”. That wording treats the federal exchanges not as federal but as surrogate state exchanges.

Other sections concerning state exchanges make no separate mention of parallel federal exchanges, implying that the Act considers them to be one and the same and that subsidies are therefore intended for both.

Section 1312(f) stipulates that only a person who “resides in the State that established the Exchange” can purchase on an exchange. If a federal exchange established for a state is not considered a state exchange, then that state can have no customers, says this rule. The clear intention is that all such exchanges are considered by the Act as state exchanges and therefore eligible for subsidies.

Three times in the Act, “Exchange” is defined as being a state exchange, the point being that there is no federal exchange, only subsidy-eligible state exchanges run by the federal government.

It was the IRS that decided federal exchange clients would be eligible for subsidies. It is traditional that the interpretation by the agency of government charged with administering a law is given deference — the “Chevron” principle, named for an earlier precedent — one argument the government makes. The petitioners against the federal subsidies argue that the IRS does not have the authority to make so sweeping a revision of so major a statute.

TRICKING THE STATES

The seven words occur in a section of the Act that spells out — in the tangled language familiar to do-it-yourself 1040 filers (e.g., “the amount equal to the lesser of” and “the excess, if any, of”) — the rules for who is entitled to a subsidy and how much. Briefs for the government raise a twofold question: first, why would a restriction of such enormity be buried in the formulas of an ancillary, nuts-and-bolts sub-section; and second, why would Congress knowingly build in a provision that has the power to sabotage its own law?

One of the briefs in support of the government was filed by 23 state attorneys from a mix of red and blue states that says the challengers’ position would “violate basic principles of cooperative federalism by surprising the states with a dramatic hidden consequence of their exchange election”. The brief assumes that each of the 34 states that elected not to set up an exchange must have deliberated their options, so would they all have decided to let the government run their exchange had they realized that subsidies would be denied to their people? “Nothing in the ACA provided clear notice of that risk”, which is a principle of cooperative federalism. “Retroactively imposing such a new condition now would upend the bargain the states thought they had struck”, says the brief.

SWING VOTE

In the March hearing, Justice Anthony Kennedy, the crucial swing vote on the otherwise ideologically polarized court, had something else on his mind. King may only be a case of statutory interpretation, but wouldn’t there be constitutional issues if the Court ruled that subsidies were only available to residents of a state that had set up its own exchange? Doesn’t that effectively and unconstitutionally coerce the states to fall in line, Kennedy asked, because accepting so severe a penalty on its citizens would not be a “rational choice for a state to make”. And how to justify denying them insurance subsidies that other Americans would get? “There is a serious constitutional problem here if we adopt your position,” Kennedy said to Michael Carvin, representing the plaintiffs. That gave hope to those who want Obamacare to go forward undisturbed.

This factors into our prediction at the conclusion of the other article on the subject, for which see “If the Supreme Court Eviscerates Obamacare, Then What?”. But one is left to wonder whether the justices actually read the briefs, some of their questions being seemingly superficial. And do they consider the real world consequences of their actions, given that they are personally utterly unaffected. Samuel Alito contended in the hearing that, if the subsidies were denied, “going forward there would be no harm”.

Do any of them realize that, were they to lock onto seven words rather than the rest of the text, the disruption of millions losing their insurance after the disruption of gaining it would place the legitimacy of the Court at risk?

Finally, Jeffery Toobin’s fitting observation: “The great Supreme Court cases turn on the majestic ambiguities embedded in the Constitution…. Instead of grandeur, there is a smallness about this lawsuit in every way except in the stakes riding on its outcome”.

Our Magnanimous Government Will Use Your Money to Waive Student Debt

It begins. The student loan crisis that has been just over the horizon.

The federal government has announced that it will forgive loans to students lured to colleges by fraudulent marketing promises. The policy stems from
the bankruptcy of Corinthian Colleges, which had been preceded by student protests and their refusal to pay for worthless educations. But Education Secretary Arne Duncan says that the waiver policy will apply to money owed by students defrauded
by any college, public or private.

The cost for Corinthian alone, should all its 350,000 students of the last five years apply to have their debts wiped clean, would come to an estimated $3.5 billion, said the Department of Education.

Our article, “The Intractable Student Loan Mess“, previously dealt with the mounting threat to taxpayers, who will be on the hook ultimately to pay for students who default on their loan repayments. And that article cited several ways that the government will forgive loan balances after good faith payment records, with the waived cost passed on to the public. But we need now add to that the new category of wholesale waivers that absolve students of their entire debt in the wake of college bankruptcies. “There will be more”, says Duncan.

waiting to happen

The government student loan program was designed for disaster. The policy of issuing loans to virtually any youth to go to any school led large corporations, private equity firms and even hedge funds to chase after the huge pool of government money. At peak they had created some 2,000 for-profit colleges, some no more than storefronts. Little emphasis was paid to academics. The marketing departments, whose job it was to talk prospective students into taking out government loans to pay to their colleges, often outstripped the size of the faculty. None of them could have continued without the loose accreditation policies of the Education Department that made the colleges eligible to be paid by government-issued student loans, because they subsisted almost entirely on that source of revenue.

The outcome has been that, while the for-profits account for only 12% of students, they account for nearly half of all loan defaults. Only 32% of students stay to graduate from the four-year programs, earning degrees viewed as inferior by employers. The other two-thirds drop out with nothing to show for their mistake but debt. Of 21 institutions that last fall were running default rates so high that they could lose the right to accept federally issued students loans, 20 of them were from the private, for-profit ranks.

Worse, federal data analyzed by the Institute for College Access and Success shows that graduates of for-profit schools are more likely to have debt of $40,000 or more, given that those marketing departments prey heavily on low income youths persuading them to take their over-priced calorie-free courses.

cold turkey for corinthian

The experience with Corinthian will no doubt be repeated. The Department of Education (DoE) has generally had difficulty getting the performance statistics from Corinthian that are required for accreditation. Without that validation the government won’t issue loans to students who want to attend a school. Early last year the DoE gave Corinthian a deadline to produce data and when the college said it could not, the government put a 21-day hold on turning over any further money from loans until Corinthian came up with the data.

This caused a cash crisis. So completely dependent on government-issued student loan money is Corinthian — that’s why these colleges exists, after all — that 90% of their revenue vanished. The government gave the school tide over money but told it to sell assets and liquidate.

The Wall Street Journal wrote a string of outraged editorials decrying (in this example) the government’s “regulatory ambush” that “began to drive Corinthian out of business by choking off” student aid for “supposedly stonewalling exhaustive document requests” and had forced the company “at gunpoint” a year ago to sell 85 campuses and close a dozen others. Government forcing closure of a business was the offense, not the swindle. The paper’s own news columns acknowledged that a number of state attorneys general had filed “scores of lawsuits” alleging fraud in recruiting students. It had falsified grades, attendance, and job-placement statistics. At least one of its schools had paid temp agencies to hire graduates for a couple of days so they could be counted as employed. A 2014 Consumer Finance Protection Bureau lawsuit claimed that Corinthian had “lured tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services”. The DoE had fined the college $30 million for 947 instances at just one campus of phony post-graduate employment data. These were “paperwork errors”, said a Journal editorial. Add to it all that other colleges do not honor Corinthian course completion credits.

It is the Department of Education itself that issues loans to students and decides which colleges qualify to receive payment from those loans. The Department itself then collects from students. The DoE has been slow to see the problems coming and slower still to act. This page first reported in “The Next Financial Crisis: Student Loans” almost three years ago — and since.

Now, as the DoE discovers it has been less than rigorous in accrediting colleges before handing them billions in loans, Secretary Duncan belatedly declares himself shocked to find that for-profit schools have brought “the ethics of payday lending into higher education”. The DoE will increasingly face having to bring about their collapse by shutting off their eligibility for payment by student loans. That in turn leads to cancellation of the students’ debt, aggravating the cost to the public that the reckless largess of the department for approving loans to those Potemkin colleges to begin with.

making matters worse

Congress has always been complicit in the student loan program. More than one of the 2,000 colleges are bound to be in everyone’s home district, so Congress members champion the for-profits for the money they bring. More than that, Congress views students as a profit center, as reported here two years ago when there was a fight to keep the interest rate on loans at a reprehensible 6.8%, callously indifferent that these are students who will be entering entry-level jobs, if fortunate enough to find a job, and at a time when banks were borrowing — as they still can — from the government at virtually 0%. So avaricious was Congress to make money off students and burden them through their lives that it passed a law stating that even if you declare personal bankruptcy, you cannot discharge a college loan debt owed to the government.

Now that the predicted problems are breaking out, Congress wants us to think its hands are clean. Lamar Alexander, Republican senator from Tennessee and chairman of an education committee, thinks the cost shouldn’t be the problem of the government even though its accreditation helped dupe the students into trusting the schools and it was the government that handed them the loans to pay to those schools. Yet Lamar says, “If your car is a lemon you don’t sue the bank that made the auto loan; you sue the car company”. How would that work out, each student independently suing a bankrupt school, while the government says, “None of our doing”?

There is already a decades-old law that grants debt relief to students at colleges that close their doors, but by expanding that to fraud, seemingly whether a college has closed or not, . Duncan is being magnanimous with other people’s money — ours. He said in a conference call with reporters that the administration is “determined to crack down on colleges that leave students with huge debt, worthless degrees and few job prospects”. But as it chokes off giving loans to students to attend schools that graduate too few, or that show dismal post-graduate employment rates, or are found to falsify such data, it will be the government itself — shutting the schools its indiscriminate lending allowed to exist — that will cause the mushrooming loan cancellation costs, sticking taxpayers with the tab.

Fox News Said To Be Hurting Republicans

Bruce Bartlett, one of the early proponents of trickle-down economics with a long history of service to the Republican party,
working for both Ronald Reagan and George H. W. Bush, stirred up controversy with a paper published in May that says Fox News creates what others have called “an echo chamber” that lulls viewers and the Republican Party into the “wishful thinking” that its far right views enjoy greater support with the public than is actually the case.

Unlike its liberal counterpart, MSNBC, which has much lower viewer ratings, Fox “became the dominant — and in many cases, virtually the only — major news source for millions of Americans”, says Bartlett.

“This has had profound political implications…Indeed, it can almost be called self-brainwashing — many conservatives now refuse to even listen to any news or opinion not vetted through Fox, and to believe whatever appears on it as the gospel truth”.

Bartlett’s data say that Fox’s core viewers are less well informed than viewers who watch other sources. They tend to have erroneous beliefs about the Iraq War, the Affordable Care Act and other major issues, he says. The Daily Show recently put together on Vine “ 50 Fox News Lies“, all of which were validated as such (or as “pants on fire” over the top) by the Tampa Bay Times‘ Politifact.com. Among them: NASA scientists fabricated data to prove climate change exists, Obama sent more forces to fight Ebola than ISIS, the Affordable Care Act will eventually lead to single-payer health care.

Because of such misinformation, says Bartlett, Fox viewers are more likely to be more poorly informed. They are…

18-points less likely to know that Egyptians overthrew their government than those who watch no news at all (after controlling for other news sources, partisanship, education and other demographic factors). Fox News watchers are also 6-points less likely to know that Syrians have not yet overthrown their government than those who watch no news.”

tug to the right

That’s the public. Bartlett’s greater concern, as a conservative wanting electoral success, is with politicians. He says the Fox news agenda ships “misinformation” to the party’s far-right base that serves to stunt the GOP’s growth by encouraging it to field extremist candidates. That prevents the Party from reaching the centrist voters that are essential to winning national elections. Bartlett quotes Lincoln Mitchell, a political scientist at Columbia University, who observed, “One of the reasons Mitt Romney was so unable to pivot back to the center was due to the drumbeat at Fox, which contributed to forcing him to the right during the primary season.”

outrage

Bartlett’s other criticism is the Fox theme of perpetual anger which he says causes Republican politicians to think they should adopt the same outrage themselves. It creates a feedback loop where Fox hosts’ outrage at liberals is reflected back to them by politicians who conclude anger is a winning posture. This alienates voters who traditionally gravitate to politicians with a more positive outlook.

Pushing back against this is Jack Shafer at Politico, who claims Fox has a negligible effect. It is just a “news-entertainment hybrid designed to make money”, its combative programming style simply meant to attract viewers.

Bill O’Reilly and Sean Hannity are well-known exemplars of that style in the prime time hours, but anger is pervasive on the network during the day as well in group talk shows such as the four women and an always simpatico male guest on “Outnumbered” at noon weekdays, and on “The Five” in the late afternoon with some of the same rotating cast, where they vent their outrage about such Fox perennials as Benghazi, the IRS, and the administration having no strategy against ISIS.

One of “The Five” hosts is Eric Bolling, whose comments have drawn criticism for being racist, as when he referred to Obama having black visitors to the White House as “not the first time he’s had a hoodlum in the hizzouse”, and sexist, as when he jokingly asked whether female pilot Maj. Mariam al-Mansouri from the United Arab Emirates leading a squadron against ISIS in Syria qualified as ‘boobs on the ground”.

Bolling has his own show on Saturday called “Cashin’ In”. As an example of the perpetual anger that Bartlett and others cite as characterizing Fox, he closes the show with a weekly essay he calls “Wake Up America”. We’ll close with his from just before Memorial Day, in which he tells us that threats of the moment are what we should be worried about, not the threat climate change poses to the future of mankind and the planet:

Bolling: This week at the U.S. Coast Guard Academy commencement, President Obama addressed the most pressing issue to American national security . Ready for your head to explode? In 3, 2, 1:

Obama video clip: “Climate change constitutes a serious threat to global security. There comes a point when the worst effects will be irreversible, and time is running out.”

Bolling: You know, I never would expect a commander in chief who is knee deep in a failing war strategy to call climate change our most pressing issue given ISIS just took Ramadi in Iraq and Palmyra in Syria and here at home two more ISIS sympathizers were arrested in L.A. just two days ago and the FBI was so worried about ISIS trying to recruit our youth they went to a New Jersey high school to warn students about ISIS. Clearly, ISIS is a major threat to our national security but that’s not all that ails America. Race relations are at a boiling point, high schoolers are portraying cops as brutal killers targeting the black community, while lawmakers are pointing their fingers at law enforcement from behind their security details and liberal academia is piling on, blaming cops for the problems plaguing the black community [as representative of this purported universality, Bolling resorts to a video of a high school principal from a town named Belton in an unidentified location presumably somewhere in the U.S. who refers to police killing young black men].
No, Mr. president, the climate is not a threat, and it’s certainly not an imminent threat. In fact, it’s been a decade and a half of the hiatus in global warming and that is a fact, so stop playing the American people. We do have some very imminent threats to the country. Race relations are fragile. Our law enforcement community is under assault and ISIS is knocking on our back door. And what scares me most is that you have no strategy for any of these. So here comes some free advice. Develop an ISIS strategy, then develop a strategy to protect our men and women in blue who keep us safe every day, and finally work on a race strategy that calms tensions rather than fuels the flames. As for climate change, leave that for Bill Nye and the global warmist clowns. It’s beneath the office even for a bleeding heart liberal like yourself.

Jun 14 2015 | Posted in Politics | Read More »

If the Supreme Court Eviscerates Obamacare, Then What?

Conservatives are elated by the prospect that the Supreme Court may later this month deal a crippling blow to the Affordable Care Act, otherwise known as Obamacare. Michael Greve, once chairman of the Competitive Enterprise Institute, which has funded the legal assault on the Act, put it this way: “This bastard has to be killed as a matter of political hygiene. I don’t care how this

Map shows who runs each
state’s exchange. (click image to expand)
is done, whether it’s dismembered, whether we drive a stake through its heart, whether we tar and feather it and drive it out of town, whether we strangle it.”

King v. Burwell is the healthcare law challenge that rests entirely on four words in the 902-page Act — words that, if followed regardless of the rest of the statute, say that the subsidies that make health insurance affordable to the great majority of new policy holders can only be paid to those who buy insurance through an exchange “established by the State”.

But 36 states didn’t bother to set up insurance exchanges, leaving the chore to the federal government. If a majority of justices say that the four words predominate, that persons who bought insurance on the federal HealthCare.gov site are ineligible for subsidies, then policies are expected to become too expensive for 8 million very angry people come July, with more to join them as premiums soar out of control.

then what?

The President is probably already carrying around in his breast pocket a single-sentence fix for Congress immediately to pass. But passage would require a suddenly forgiving and charitable outlook from a House of Representatives that has voted over 50 times to repeal the healthcare act in its entirety, and a Senate ruled by a majority leader who has said, “I want to pull this law out, root and branch”.

At times it seems that the black robes worn by the justices are more like burkas, shielding them from the actual world. How else could Justice Scalia have such faith in that Congress as to ask Solicitor General Donald Verrilli, who argued for the government in the March hearings, “You really think Congress is just going to sit there while all of these disastrous consequences ensue?”. And Justice Alito assumed, “It’s not too late for a state to establish an exchange” — in all 36 states evidently and in time for the Court’s adverse ruling — “so there would be no harm going forward”.

sitting on their hands

The Obama administration’s attitude is that, if conservatives want to eviscerate the law, then it’s for them to deal with the fallout. Sylvia Burwell, who as Secretary of Health and Human Services is the defendant in King v. Burwell, has said, “We know of no administrative actions that could, and therefore we have no plans that would, undo the massive damage …that would be caused” by a decision against the administration. Besides, were the administration to scurry about, positing solutions, it might work against them because it would say to the Supreme Court that there are viable alternatives, so go do your worst.

Twenty-five days is the traditionally expected time after a court ruling that it is to take effect. It is then that the government would have to stop sending tax credits to the insurance companies, which would begin billing policy holders the full cost. They are for the most part lower- to middle-income families, working part time or full. More than 80% receiving

subsidies fit this profile
and for them an outsized medical cost would be devastating. Subsidies pay for an average of 72% of their insurance costs, according to administration officials, meaning that policy costs would almost quadruple if the Court shuts off subsidies. That would set in motion the feared “death spiral” [sidebar] that will collapse the Affordable Care Act.

That is, unless the administration adopts one imaginative strategy put forth by William Baude, an assistant professor of law at the University of Chicago: he suggests the administration “announce that it is complying with the Supreme Court’s judgment — but only with respect to the four plaintiffs who brought the suit”. They do not represent anyone other than themselves. Pay them their minuscule damages and be done with it. It took some doing to line up these four. Who else would sue because they had been paid subsidies?

squeeze play

Ironically, it will be Republican governors who will experience the most acute pressure. It is they, holding the governorship in 37 states, who account for most of the 36 states that, in defiance of Obamacare, did not set up exchanges in their states.

The Obama camp will pressure them to do so now, or might devise a dodgy workaround for them to adopt their state’s federal exchange as their own, so that it would become eligible to issue subsidies. If they go along, those governors can expect to be pilloried within their party for further embedding the Affordable Care Act. If they don’t, they will face the wrath of their irate citizens who, as the consequence of no state exchange, will lose insurance that has become too costly without the subsidies, and face as well the disaster this will be for the insurance markets in their states when all those policies evaporate.

Foreseeing this outcome perhaps explains why 31 of those governors did not file amicus briefs with the Supreme Court urging a decision against the administration. A number did the opposite, asking the High Court to preserve the subsidies their residents get through HealthCare.gov. The Affordable Care Act’s Medicaid expansion offers an example of what might be on the horizon. Since 2012 some 28 states have joined new Medicaid. Eight more are considering, even holdout Florida. If the same pattern emerges with states setting up insurance exchanges, Republicans will witness a slow-motion defeat.

replace and repeal

But Congress has other plans. Republicans will spring to action the moment the gavel comes down on a decision that forbids subsidies for insurance bought on federal exchanges. No end of bills await the moment, whether the one by Senators Richard Burr of North Carolina, Utah’s Orrin Hatch and Representative Fred Upton of Michigan, or from freshman Senator Ben Sasse of Nebraska or by Ron Johnson, senator from Wisconsin, to select only three.

All plans would extend subsidies into 2017 to avoid voter repercussions of cutting them off before an election year. They would variously offer a permanent program of tax credits (the form that subsidies take) to help pay for insurance, scaled downward as income rises (Burr-Hatch-Upton); block new applicants from receiving subsidies but keep them flowing to current enrollees at current levels until August 2017 and then end them cold turkey (Johnson); or cut them to 65% of current levels and phase them out by 5% a month until they are extinguished (Sasse).

What all have in common is abolishing both the individual mandate that requires individuals to buy insurance or pay penalties, the mandate that requires employers of over 50 people to buy insurance for them, and the federally mandated minimal insurance plans. States would be freed to develop their own reduced criteria to make insurance more affordable. Insurers could compete across state borders.

But all would keep the Obamacare provisions that coverage include family members up to age 26, that insurers must accept applicants with pre-existing conditions, that insurers cannot cancel policies when subscribers fall ill. That led Paul Waldman of the The American Prospect to observe “something remarkable” on Washington Post online, that “for all the claims we’ll hear about how it undoes the tyrannical horror of Obamacare, the Republicans’ version of health care reform” is “little more than Obamacare Lite…This tells us that Barack Obama has for all intents and purposes won the health-care argument”.

None of the reform plans seem to confront the question of what happens to premiums for the rest if the healthy are free not to buy in. Perhaps inducing the death spiral is the unmentioned intent: eliminate the rules to undermine the tenuous structure crafted to make all the parts of the Affordable Care Act come together to work financially so that eventually the last vestiges of the Obamacare design collapse. Then, once a Republican president is installed come January 2017, with Republican control retained in both houses of Congress, what’s left of the Affordable Care Act can finally be repealed.

What will work for the Republicans when these bills come up for a vote is that blame will shift to the President when he vetoes them. They preserve federal subsidies at least for a time and it will now be Obama who will have made insurance unaffordable by refusing any encroachment on his grand healthcare design.

But legislation may never reach that stage. Arch conservatives in groups such as the House Freedom Caucus with over 30 members, fronted by Jim Jordan (R-Oh), simply want the subsidies to end with no soft landing and will work to block passage in the House.

won’t happen

But we’ll go out on a limb and say that none of the above will happen, that the Supreme Court will vote 6 to 3 that subsidies may be paid to those who buy insurance through the federally managed exchange.

Three — Scalia, Alito and Thomas — will assuredly vote against the administration. Despite Scalia’s lecture on the philosophy of “textualism” (see “Will the Supreme Court Cripple Obamacare?“), he and they will fasten on the four little words.

Four — Ginsburg, Breyer, Kagan and Sotomayor — will assuredly vote for the administration’s position.

That leaves Kennedy and Roberts. Kennedy surprised listeners in the March hearings with his concerns that there may be constitutional issues in effectively coercing states to set up exchanges else see their citizens lose benefits that will be granted to other states that fall in line. It is hard to see how he can go back on that and explain away those concerns, so our guess is that he will side with the government.

Thus deadlocked at 4 and 4, how will Chief Justice Roberts vote? He might yearn to make amends with the conservative base after letting the individual mandate go forward, classifying it as a “tax”, when he could have delivered a death blow to Obamacare, killing it in its crib.

But would he really be so blinkered as to lock onto four words in the text, ignoring the rest of the Act, several sections of which make clear that availability of subsidies for all who qualify economically was the intent? Is that cramped interpretation what he wants as the legacy of the Roberts court?

With the disastrous Citizens United decision already in his record, does he now want to author the chaos that will ensue if four words are allowed to disembowel the healthcare law? Or will he take note of what Judge Andre Davis said to the King attorney in oral arguments before the federal appeals court in Virginia that led to the Supreme Court taking up the case: “You are asking us to kick millions of Americans off health insurance just to save four people a few dollars?”

Congress Close to Fast-Tracking Giant Pacific Trade Deal

House Halts Trade Bill: May 25: House Democrats went counter to norms by voting against assistance to those who would lose jobs from trade bill imports, a tactic to guarantee that Democrats would vote against the trade bill itself for lacking this this provision. For the President, who allied with Republicans against unions in a reversal of form — anything to get his trade bill passed — it halts fast-tracking the trade bill in its tracks.
            

      It is the biggest trade deal since the North American Free Trade Agreement (NAFTA), signed by Bill Clinton over twenty years ago. That one linked the U.S. with Canada and Mexico. This time it is twelve nations bordering the Pacific, a pact that will will create jobs and expand our exports, insists President Obama. Not so, say Democrats and unions. It will export the jobs themselves to low wage countries, witness the damage of past trade deals. They can point to March’s 43% jump in the trade gap to $51.4 billion, the highest since October 2008. That the pact has been negotiated in secret serves to heighten their anger.

Just as the Affordable Care Act was the “signature achievement” of his first term, Obama badly wants the Trans-Pacific Partnership (TPP) to adorn his second term. He is lobbying hard to make it happen. Essential is that Congress “fast track” the deal — agree to simply an up or down, yea or nay, vote, with no amendments, no debate and no filibustering. The other countries in the group, especially Japan, won’t have it any other way. They won’t sign off on final conditions only to have the American Congress step in and scramble the terms.

For that to happen, both houses of Congress must agree to special rules for passing trade bills, rules set forth in a prerequisite bill called Trade
Promotion Authority. The TPA would govern not just the Trans-Pacific bill but would “grease the skids”, as Sen. Elizabeth Warren (D-MA) puts it, for every trade bill that comes before Congress in the next six years. “The next president and, potentially, the one after that, will have the same ability to ram through trade deals, and so when President Obama says that he refuses to work on a trade deal that would weaken financial regulations”, as would the pending European trade agreement of 28 nations and the United States, “he can’t bind the next president”.

status

The Senate has passed the TPA bill 65-33 and it is now for the House to decide, where not all Republican votes are assured. Factions bridle at terms that allow foreign corporations to sue to challenge our laws, so the administration is pressuring Democrats to go against their normal backing of labor and jobs to make up the difference.

Even if this fast-track procedural bill sails through, passage of the trade deal itself could derail. Committee members have come up with “objectives” that they expect to see met once the secret terms are revealed. They cover intellectual property protection, removal of barriers blocking our agricultural exports, worker safety, environmental standards, human rights — the list is 150 items long. If the United States trade representative fails to meet the objectives, a 60-vote majority can switch off “fast-track” and open the deal to amendments.

why so secret?

Almost entirely absent from current media coverage or politicians’ comments is any mention of provisions of the draft pact that go far beyond just trade. As this page covered in an exposé titled “Corporations Press for Power Grab in Pacific Trade Pact” over a year ago, a time when mention of the TPP was missing altogether from the media, only 5 of its 29 covenants are concerned with typical trade rules such as tariffs and quotas. The rest, a couple of chapters of which had been exposed by Wikileaks, revealed why negotiations have been conducted all these years at a level of such secrecy (a title page is marked “classified” by the U.S. government) that participating nations are pledged not to reveal their contents until four years after the final deal is struck or talks are abandoned.

That collides with what Congress demands. Another provision of its fast-track bill calls for laying the agreement bare in a 60-day period for public review and comment before Obama can sign. That’s far removed from today’s rules. Now, only members of Congress can view the document, only in a basement room of the Capitol Visitor Center, only one section at a time, no copies, no notes even, and no discussing what they’ve read. “It’s like being in kindergarten,” said House member Rosa DeLauro (D-Ct), who leads the opposition to Obama’s trade agenda. “You give back the toys at the end.”

This much is known from the leaks, and makes clear why the administration and negotiators want to keep the pact secret:

Some 600 corporations have had special reviewing access during the long negotiations, and have let their desires be known. They make up 84% of the advisory conclave. Unions, whose workers stand to be greatly affected, have a less than 5% representation.

All government contracts would be open to bidding by foreign corporations. Buy American would be outlawed.

Corporations will not be constrained by a country’s laws. They will be able to sue governments when disputes arise, their cases decided not in that country’s judicial system, but by World Bank and United Nations tribunals.

Corporations setting up shop in a member country would be given special privileges. If a law is subsequently passed that affects their profits negatively, they will be compensated. Native companies will not enjoy that benefit.

Provisions proposed by the U.S. carve out protections for pharmaceutical companies, allowing “evergreening” patent extensions to delay cheaper generics from entering the market so that drug prices can remain high.

There are questions about food safety, about restrictions against inspecting food entering the U.S. from countries that have minimal or minimally-enforced food regulations. There are allegations that environmental requirements have been weakened to accommodate certain countries as “when Peru walked back from environmental regulations”, complained Ms DeLauro to the The New York Times. She says she was ignored when such concerns were raised with Michael Froman, the trade representative in charge of negotiating for the U.S. and keeper of the tight lid on the contents of the agreement.

labor under assault again

International trade pacts of the past make make it a certainty that still more jobs will be lost. A
2013 study attributes competition from Chinese imports as the cause for one quarter of the decline in U.S. manufacturing employment between 1990 and 2007 and foreign competition depressed the
wages of those jobs that remained. A study from the University of California at San Diego reckons that the flood of cheap Chinese imports cost the U.S. 2 million to 2.4 million manufacturing jobs between 1999 and 2011.

As imports flowed in, our deficit with Canada and Mexico went from $26.1 billion to $185.4 billion by 2011. NAFTA cost the United States a million jobs, according to the Economic Policy Institute. Sen. Orrin Hatch (R-UT), co-sponsor of the fast-track legislation, lacks the scruples to admit that. On the NewsHour he looked right at the camera and said, the impression of job loss “is false. There were some jobs lost under NAFTA…but there were a lot of jobs that were created under NAFTA, too, and anyone who says otherwise is just not telling the truth”.

Two 2014 papers concluded that the globalization between 1983 and 2002 that forced American workers out of manufacturing and into lower-paying jobs in other sectors led to real wage losses of 12% to 17%.
In short, whether from formal trade agreements or free trade globalization, American workers took a beating.

Obama only acknowledges that “there was some erosion of our manufacturing base at the time”.

this time it’s different

Proponents of the trade deal say that manufacturing jobs are already gone, so what’s to lose? “TPP isn’t about manufacturing. Globalization in that sector is a fait accompli,” says Gordon Hanson, one of the authors of the UCal San Diego study. This agreement won’t have much of an effect on U.S. jobs, says that argument.

Instead, it will force open doors where U.S. firms, especially services such as finance and insurance, are denied entry or where intellectual property is charged onerous tariffs. There are rules to combat hidden protection such as subsidies that fund state-owned enterprises or businesses that countries view as strategic.

Instead of losers there will be winners, especially American agriculture, technology, insurance and pharmaceutical companies and large manufacturers.

“Ninety-five percent of the world’s customers are outside of the United States,” said Obama in a late-April radio address. “The fastest-growing markets in the world are in Asia. Jobs at businesses that export are good, middle-class jobs. On average they pay more than other jobs.”

Obama is pitching the deal as “the most progressive trade bill in history. It will have the kinds of labor and environmental and human rights protections that have been absent in previous agreements”.

the bigger agenda

That’s for public consumption. For Obama, the larger dimension of the Trans-Pacific Partnership is as a blocking move to retain American control of the Pacific with a ring of allied countries. It is a counterweight against China’s aggressive moves. He is probably less concerned about trade per se. The test of that should become apparent in the final terms with Japan, which has always played the United States for a willing fool, blocking a long list of our goods that still includes automobiles and agriculture. With the Japanese Prime Minister Shinzo Abe at his side during a recent visit to the U.S., Obama said, “There are many Japanese cars in America; I want to see more American cars in Japan as well”. That puts it mildly. The ratio verges on the infinite.

Abe’s willingness to join TPP is motivated by the threat of China. Japan watchers think he believed that by joining the U.S. in its move to block China, Japan would be spared from making real concessions. We will undoubtedly see Japan continue to limit our autos from his country, continue to protect inefficient Japanese farms from rice imports, continue to limit imports of beef and pork. Yet incredibly, Abe wants us to do away with our 2.5% tariff on Japanese cars. Obama is so anxious for the trade deal to go through that, much like one after another concession to Iran in the nuclear negotiations, we will probably see him go along with continued Japanese protectionism. Except we may never get to see what concessions are made to Japan. They will likely be buried in secret side deals sequestered from the view of the other trading partners who, if they knew, would demand the same.

In other words, as a trade deal meant to level playing fields, the TPP is something of a sham. More to the point, as Obama said in this year’s State of the Union address, “China wants to write the rules for the world’s fastest-growing region.Why would we let that happen? We should write those rules”. Just recently Obama countered critics with:

“China, the 800-pound gorilla in Asia will create its own set of rules,” and is busy forming trade relationships across Asia “that advantage Chinese companies and Chinese workers and … reduce our access … in the fastest-growing, most dynamic economic part of the world.” But if we close on the TPP, “China is going to have to adapt to this set of trade rules that we’ve established.” If instead we fail, 20 years from now we will “look back and regret it”.

Defense Secretary Ashton Carter put it more succinctly. The trade deal is “as important to me as another aircraft carrier.”

Jun 9 2015 | Posted in World | Read More »

Chaos in Congress Downs the Patriot Act

It was fitting that we saw some curtailment of the Patriot Act in the same week as the second anniversary of Edward Snowden’s outing of the NSA, and appropriate that dealing with it betrayed a government beset with confusion and disarray.

Mitch McConnell, clearly misreading the sense of the Senate and unperturbed by a federal appeals court finding NSA’s data capture illegal, attempted to extend the Patriot Act unchanged for another five years. That was voted down. Then North Carolina’s Richard Burr, who chairs Senate intelligence, went around his own committee to on his own put forth a two month extension to buy time. Also voted down. With the expirations plainly visible from a long way off, Burr and his committee had written no alternative bill.

In the face of a June 1 sunset for three sections of the Patriot Act, McConnell blundered by devoting the week before Memorial Day to the Pacific trade pact, which has no deadline, and then stunningly let the Senate take a weeklong break (for that same holiday America’s working public gets just the one-day).

He instead called the Senate back for an unheard of Sunday session, on the eve of the expiration, a short timespan that allowed presidential candidate Rand Paul, his co-Senator from Kentucky, to again run out the clock on the Senate floor arguing that nothing should replace the expiring Patriot Act provisions, while his website promoted a Filibuster Starter Pack selling T-shirts and bumper stickers to fund his campaign.

That left the USA Freedom Act as the sole option, a bill already passed by the House by a resounding 338 to 88, an unusual bipartisan confluence that didn’t register with McConnell. But the Senate wanted to tack on four amendments, which would have required a renegotiation with the House. More problematic, the House had barred amendments and if it were to allow consideration of Senate amendments, it would have to give its membership the same option, adding weeks and an uncertain outcome. So Speaker John Boehner laid down the law: no amendments, vote on it as is.

Came McConnell before the cameras to poutingly ask why his Senate isn’t allowed to debate the bill and consider amendments, as if the schoolyard bully had just taken his lunch money. Again he was out of step. The Senators clearly didn’t care that much about those amendments. They passed the USA Freedom Act 67 to 32.

cognitive dissonance

Evidence that the NSA’s bulk phone data collection had been ineffectual carried little weight with lawmakers. They seemed to not want to hear that.

An agency created by Congress, the Privacy and Civil Liberties Oversight Board, had access to classified reports about how NSA used the data and its boasts of success. But the board found no instances in which it stopped a terrorist attack. “It has some minor benefits that could have been accomplished through other legal means”, said the board’s chairman. But any lapse in “this critical tool would lead to attacks on the United States”, according to Arkansas Senator Tom Cotton.

The Justice Department’s inspector general report said its FBI agents “did not identify any major case developments that resulted from the records obtained in response to Section 215 orders”.

Oblivious to this, McConnell said to reporters, “There are a number of us who feel very strongly that this is a significant weakening of the tools that were put in place in the wake of [the 9/11 attacks] to protect the country”.

A group appointed by President Obama to review NSA practices concluded that the program of vacuuming up fourteen years of phone calls by everyone in the United States had accomplished close to nothing, yet one of the group’s members, University of Chicago professor Geoffrey Stone, said , “It may be that it will, in fact, enable the government to prevent a terrorist attack. The fact that it hasn’t…doesn’t mean it won’t”.

Only one conviction arose from the trillions of phone records in all the years since 2001. A lengthy research piece in The New Yorker in January reveals this to be rather a sad case. Somalia-born Basaaly Moalin had as a teenager been shot several times by a solider entering his house after it was struck by mortar fire in Somalia’s civil war. He spent four years in refugee camps in Somalia and Kenya before the U.S. granted him asylum and, eventually, citizenship and was living in San Diego when U.S. backed Ethiopians invaded Somalia to oust the Islamist Courts Union, the ruling group thought by the CIA to be al Qaeda connected. Moalin heard reports that the Ethiopians had tortured and killed five of his family members. He began contributing to a group that fought against the Ethiopians which later became allied with the terrorist group al Shabaab. Moalin was advised by friends to stop contributing, but didn’t. He was caught and sentenced to 18 years in federal prison.

comedy of ignorance

The USA Freedom Act leaves phone data with the phone companies, which NSA can access with the FISA Court order they were always supposed to acquire related to a specific investigation. Like global warming deniers who say “I’m not a scientist” but spout their beliefs anyway, politicians and commentators were not at all reluctant about exhibiting their lack of knowledge of how things work.

A Wall Street Journal editorial unabashedly tried to confuse its readers when it said the USA Freedom Act “pretends that such metadata will still be” but NSA will need to demand “specific information from the 1,400 global telecom providers, which may then turn over the records they’ve retained”. NSA never pooled phone records from 1,400 global telecoms, only the eight in the U.S.

Journal columnist Daniel Henninger says Obama “rightly worried that requiring the NSA bureaucracy to interact with the telephone companies’ bureaucracies … will re-create the delays and vulnerabilities that produced the attacks on the World Trade Center towers, the Pentagon and Flight 93’s fall into Shanksburg, Pa.”. This shabby scare tactic pretends that the new law requires that we revert to the technology of 14 years ago.

Strewing more more confusion , Henninger goes on: “Do I want the NSA to be able to find out what Elton Simpson has in mind before arming himself and another nut to attempt the slaughter of scores of people in Garland, Texas, or elsewhere? Yes, I do.” The foreknowledge of Elton Simpson did not come from phone records. His lies continue with “a long list of of bureaucratic and judicial hoops for the NSA to jump through”. There are rules what can be done with information obtained, but the FBI need only present to a FISA judge “reasonable grounds that the call detail records are relevant “and “a reasonable, articulable suspicion” that the party of interest is associated with a foreign power. Hey, read the Act.

In a Wall Street Journal opinion piece, Michael Mukasey, former Attorney General under George W Bush, describes

“a Rube Goldberg procedure that would have the data stored and searched by the telephone companies (whose computers can be penetrated and whose employees have neither the security clearance nor the training of NSA staff)… The government, under Mr. Obama’s plan, would be obliged to scurry to court for permission to examine the data, and then to each telephone company in turn”.

what bureaucracies?

All such comments show an abysmal lack of understanding of how computer communications systems work. Phone companies wouldn’t do the searching, their employees would not be involved, and, yes, their computers can be penetrated — by NSA, armed with a FISA Court order that unlocks the special communication channel into a phone company’s database for the extraction of the call records of a single target phone number, and within milliseconds, then reaches into other phone companies’ data for numbers calling or called by the target’s phone. That Mukasey cites a cartoonist who died in 1970 suggest he may be picturing the government ringing doorbells as how they go about getting data when he says “scurry[ing] to each telephone company”. That Henninger writes of phone company bureaucracies says he thinks the data will be collected by clerks.

The Journal cites “a National Academy of Sciences group on signals intelligence stating ‘there is no software technique that will fully substitute for bulk collection where it is relied on to answer queries about the past after new targets become known.’ This is misleading; there is no full substitution right now because government has made no preparations. But there is right now a physical telecommunication conduit into every phone company else how would NSA have been able to collect all of our phone calls every day for the past 14 years?

Obama, who got no further than a Blackberry and just opened a Twitter account, doesn’t show much greater savvy. He wants to create “an alternative mechanism to preserve the program’s essential capabilities without the government holding the bulk data”, said a White House spokesperson. After all this time he hasn’t caught on to how it can be done.

A Wall Street Journal editorial concludes, “The NSA’s protective surveillance program is already an exercise in preserving liberty”. In their view the best way to preserve liberty is to impinge on our liberty, seizing our personal effects unreasonably, to use the 4th Amendment’s vocabulary. Say what you will about Rand Paul raising campaign money on the Senate floor, but when he asked, “Are you really willing to give up your liberty for security?”, Benjamin Franklin’s cautionary immediately came to mind: “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety”.