July 22nd, 2014

What should SCOTUS rule on the subsidies?

It seems altogether clear that SCOTUS will end up ruling in the not-too-distant future on the legality of federal subsidies in states that have declined to establish exchanges. I just predicted that, if only for the sake of not upsetting the whole Obamacare applecart, ultimately the Court will probably allow those subsidies. And that’s true even if the justices have to torture the law to find a way to do it.

And torturing it will be necessary:

“There are specific rules about when and how the IRS can deviate from the plain language of a statute,” Cannon explained to National Review Online, arguing that the subsidies regulation fails to comply with those rules.

The IRS can deviate from “absurd” laws, in theory, but the subsidies language is not absurd. “It might be stupid, but that’s not the test for absurdity,” Cannon says. Similarly, the IRS can deviate in the case of scrivener’s errors — typos, basically — but this is not a typo, Cannon says, because the language was written into repeated drafts of the law.

“They not only keep that language in there, but they even inserted it, this same phrase again, right before passage while the bill was in [Senate Majority Leader] Harry Reid’s office,” Cannon says. “So, it’s not a scrivener’s error, either.”

Finally, the IRS could fill in ambiguous gaps in a law. The problem for the IRS, though, is that the subsidies language is not ambiguous…

“The power of executing the laws necessarily includes both authority and responsibility to resolve some questions left open by Congress that arise during the law’s administration. But it does not include a power to revise clear statutory terms that turn out not to work in practice,” Justice Antonin Scalia wrote in an opinion that Roberts joined in full.

The legislative history of Obamacare also shows “that Congress was considering all sorts of proposals that would withhold subsidies from states that didn’t establish exchanges or do other things.” So it is logical to conclude that there was nothing accidental or unintentional about the ACA’s language.

And yet I stand by my prediction about how SCOTUS will end up ruling, even in the face of the evidence. I think the justices, particularly John Roberts, are loathe to turn Obamacare into something unworkable, especially now that it’s been in operation for more than a half a year and people have come to rely on it. That was always the danger of the passage of time, and both sides knew it.

[ADDENDUM: At Ace’s, DrewM gives some reasons he thinks SCOTUS may decline to hear the case, and that it will be decided in favor of Obamacare by the Circuit Court en banc.]

25 Responses to “What should SCOTUS rule on the subsidies?”

  1. Artfldgr Says:

    Cue the penumbras

  2. parker Says:

    When Roberts decided the individual mandate was a tax, he had to ignore the meaning of the language imposing the mandate. I see no reason he will differ when this comes to SCOTUS.

  3. Yancey Ward Says:

    I think there is little true doubt about what Congress intended- they intended to use the subsidies as a political club to beat recalcitrant Republicans into submission at the state level, so the DC decision today is the correct one legally. Like Neo, however, I am doubtful that the Roberts court will reach the correct legal decision, and will, instead, come with the decision that provides the least amount of discord given the facts on the ground, but I could be wrong.

    I will also say this- I would hire a lot of security if I were a conservative justice and the court agrees to hear the case- the nuts on the Left are freaking scary these days.

  4. Matt_SE Says:

    The ACA wasn’t really implemented when Roberts made his first infamous ruling. Now that the data is coming in, Obamacare is being shown as a fraud from top to bottom.
    Roberts, of course, also has taken a huge amount of shit for his original ruling.
    If he wants to redeem himself, this would seem a grand opportunity.

  5. Oldflyer Says:

    I found the statement that the IRS could “deviate from absurd laws” rather shocking, if not surprising. Does that make sense?

    I don’t suppose that I can deviate from absurd laws. I presume that is because I am not deemed to have the discriminatory skills of an IRS bureaucrat.

    Life in this country is just getting too weird. The people who make the laws are never subject to them. The people who enforce them are seemingly empowered to decide which they will to enforce, and which they do not. The Judges and Justices who adjudicate them decide that the laws, and the Constitution itself, only mean what they would like for them to mean.

    All the while, the population seems to be sleeping–or at the beach. All of those people I cited in the paragraph above better hope they don’t begin to take notice.

  6. blert Says:

    Roberts is going to decide based upon the President’s poll numbers.

    If they go into the tank next year 0-care may be shot up by Roberts.

    If the President holds up then I expect Roberts to take the populist way out.

    If the Senate flips to the GOP, expect no end of additional investigations into the rest of the IRS, VA, etc.

    Barry will no longer be able to run the board with Federal judges.

  7. jms Says:

    There’s another possibility. John Roberts clearly did something tricky and strange when he ruled that the Obamacare penalties were a tax and not a penalty.

    By calling them a tax he synthesized the conditions under which the plaintiffs in these cases could obtain standing. They would be subject to a tax because the subsidies were improperly made available in their states and how the issue is whether the subsidies can stand. I’m wondering if Roberts was playing a deeper game. He could have struck down the individual mandate, but because of the way he ruled, he now is in a position to potentially strike down the subsidies themselves. I’m going to reserve judgement on Roberts until this plays out. He may have let a small fish go by to get to a much bigger fish.

  8. jms Says:

    That is to say, had he struck down the individual mandate, no one would have had standing to challenge the subsidies.

  9. Don Carlos Says:

    Circuit Court en banc (=entire Court) is heavily Democratic, so en banc outcomes are known until its majority dies of old age decades from now. Just more erosion of the Rule of Law. Get used to it.

  10. Mike Says:

    The “judges” = Roberts. He is the traitor who took away our protection of the Constitution. Like every guilty traitor, his perfidy necessarily must increase as the he is boxed into his own corner. May he rot in hell.

    The liberal Justices we already know are the enemies of America, and of anything good and decent.

    Roberts is worse than them.

  11. Cornhead Says:

    As a matter of law and statutory construction, the DC Circuit is correct and the 4th Circuit is wrong. It is not even a close question.

    If John Roberts is the umpire he claims he is, he will ignore the fact that the ACA law has been in effect for some months. After all, we are only talking about tax subsidies.

  12. Cornhead Says:

    And in many states, the governors didn’t want to create a health exchange because of the IT problems and cost. Good decision. Ask Oregon.

  13. Cornhead Says:

    And I will predict right now the Supreme Court will grant cert in the 4th Circuit case and reverse it before Christmas.

  14. Matt_SE Says:


    “Roberts is going to decide based upon the President’s poll numbers.”
    Do you think Roberts cares that much about Obama’s popularity? As what, a proxy for public sentiment about the law?
    What mindset would lead Roberts to base his ruling on Obama’s poll numbers?


    I’ve heard the “playing 3D chess” explanation before, and it doesn’t hold water. Roberts’ original ruling, by allowing the government to compel citizens to buy products they didn’t want, did lasting damage to the Constitution and the relationship between citizen and state.
    There is no “long game” that justifies that.

  15. Matt_SE Says:


    It would be awesome if SCOTUS pre-empted the en banc hearing of the D.C. court in order to reverse the 4th circuit’s decision.

    Double bitch-slap for Obama.

  16. Matt_SE Says:

    “And I will predict right now the Supreme Court will grant cert in the 4th Circuit case and reverse it before Christmas.”

    I don’t see any reason to think that’s true.
    Why do you predict this?

  17. Cornhead Says:

    In law school I took a class called Supreme Court Seminar and the teacher was 8th Circuit Judge Donald P. Lay.

    While it is usually preferred that a case be “ripe” and that there is a split in the Circuits, there is no rule requiring it. You only need four votes and this is an extremely important case.

    I also hold to the quaint notion that (for the most part) federal judges aren’t political hacks with life tenure. As a pure legal question, the DC Circuit majority is correct. Very smart legal analysis on Powerlineblog by excellent lawyers for more commentary.

  18. waitforit Says:

    The underlying issue is not the construction of a certain phrase but the propriety of the passage of the initial legislation. The nation did not want this law and it had to be passed with lies and confusion.

    It might little matter what is decided; in fact, an injunction against subsidies for federal exchanges may help the law since the fearful and grasping constitute a more active voice than the majority, which may be a slim majority when it comes time to really repeal Obamacare. Their “suffering” will be trumpeted and quantified while the suffering of the “middle class” will, as usual, be absorbed as another cut or blow to the beast of burden.

  19. waitforit Says:

    On the other hand, just for clarification of the state of our judicial corruption, is there any better test? The plain language of the statute and the intent of the legislation are without dispute. Any justice dissenting from the required injunction reveals his or her lack of quality as a judge. They may be something; they are not a judge; their whole life and oath of office is a travesty.

  20. Cornhead Says:

    You can’t get an injunction against a tax. No irreparable harm.

  21. blert Says:


    I regard Roberts as being coerced by Barry.

    Indeed, the IRS, NSA, FBI on down the line are running herd/ heard on the Congress.

    Just ask Feinstein.

    At the level of the USSC, the ‘law’ turns on politics.

    And… obviously, Roberts would be the sitting judge should the imperious Wan ever be impeached.

    Everything about 0-care is politics — and shaping the polity.


    I find it rather remarkable that Barry is disestablishing the liberal Democratic party of LBJ, JFK, et. al. — and no-one is outraged at the injuries.

    At some point, Barry will have triggered a macro-default on the liberal vision.

    He’s Cloward-Piven’d the Democrat party!

    The inevitable implosion of the gibsmedats league will make ‘Whigs’ out of Democrats.

    Without the constant stream of gibs — their polling calculus implodes.

    Not surprisingly, this grand strategy is enabled by a clown who is actively anti-numeric. The Wan can’t stand numbers, budgets,… limits.

    This angst is based in his upbringing. It’s beyond argumentation. It’s of his soul.

    His rage against momma has no limit. ( In Barry’s case, it’s a rage against his grandmother. Believe me, she’s no angel.)

  22. Cornflour Says:

    I don’t have an answer to Neo’s question, but I’d like to note that “The Federalist” web site has a useful post arguing against the Democrats’ contention that the ruling by the D.C. Court of Appeals was an absurd interpretation of a single drafting error. This morning’s propaganda on NPR has adopted the “drafting error” slant, so I suppose it will become the standard mainstream media response to the D.C. court ruling.

    For anybody wh’s interested, here’s a link to the piece at “The Federalist” :

  23. Cornhead Says:

    MSNBC had a guy saying it was a “typo.”

    What a joke.

    The Left will say anything to win.

    I highly recommend Powerlineblog.com for sharp analysis.

    If Congress wanted to include the federal exchange, it could have used those exact words. The IRS people that wrote the regulation was elected by anybody.

  24. Matt_SE Says:

    To answer the original question of “What should SCOTUS rule on the subsidies,” both the text and intent were clear.
    The text in question (drawing on Powerline’s analysis) was repeated in several places, so it cannot be a “typo.”
    My understanding is that the court is prohibited (wisely) from soliciting post-facto statements of intent from legislators. When returning to contemporaneous statements/reportage on the subject, it seems clear that the intent matches the text.

    The law was written exactly the way it was intended. If that intent was flawed, that’s not the court’s problem. If the court tries to fix the language, it will then have stepped into the realm of legislating.

    SCOTUS should find that federal exchange subsidies are not authorized under the ACA.

  25. Phil Dayton Says:

    I would think that there is a good chance this ends up in the Supreme Court. As stated above, a conflict of circuits is not necessary for cert. Besides, presumably the same issue will work its way through a more conservative circuit at some point.

    Assuming it gets to the Supreme Court when there is the same alignment, I am not so sure that Roberts upholds the subsidy just because he upheld Obamacare. Really different issues. The latter was a constitutional issue; the subsidy issue involves the interpretation of a statute. Why can’t Roberts say-I upheld the law as not violating the commerce clause, and I now uphold it the way that is clearly written and not the way that the IRS interprets it.

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