[inaudible conversations]

subcommittee hearing. [inaudible conversations] >> hearing come to order. welcome, everybody. welcome to the members of this committee. before we get to the substance of the hearing i want to take just a few minutes to discuss the empty table before us. it's a symbol for how little regard the obama administration seems to have for the american people. two weeks ago this committee sent a letter to three current employees the u.s. treasury department, requesting their

attendance here at this hearing to talk about treasury's role in develop obamacare exchanges subsidy rule which is hurting millions of people across the country. and which is directly contrary to the statutory text of the underlying bill. specifically this committee sent letters to mark maicer, the assistant secretary for tax policy at treasury, to emily mcmahon, the deputy assistant secretary for tax policy at treasury and what a serving as the acting assistant secretary for tax policy when the rule was written and finalized and the deputy tax legislative counsel for tax policy at treasury. shortly after these invitation letters were sent, the treasury department reached out to my staff and brazenly indicated they did not intend to send any witnesses.

and i would note, our former attorney general eric holder, the first attorney general in the history of this country be held in contempt of congress. these three empty seats demonstrate the ongoing contempt for congress and for the american people that has manifested by the obama administration. for the treasury department to tell the united states senate they have no time, they will not even answer questions about how they promulgated rulemaking in direct conflict with statutory text. is the height of arrogance. the beginning of this hearing was to give them an opportunity to come and answer questions to recognize the oversight responsibility given to the senate given to congress by the united states constitution.

by their absence i take it the administration is saying they are not subject to oversight. and yet at the end of the day the american people provide the ultimate oversight. given that the administration refused to cooperate in this hearing, it's my hope that the full committee will take it to the next level. of invoking compulsory process. so that members of the executive branch will be made to answer whether they tried to follow the law or whether they were instructed by political operatives to disregard the law in the interests of a political outcome. that's a question the executive needs to answer. and the purpose of this hearing is to begin getting to the bottom of it.

now, can understand why the administration is reluctant to engage in this discussion. i can understand why both in substance, after over five years of obama barack barack hussein -- -- the american people were assureds if you like your plan you can keep your plan. millions of people discovered the promise was false. it was knowingly deliberately false. as millions of americans had their health insurance plans cancelled. the president promised the american people, if you like your doctor, you can keep your doctor. that too we now know was a statement that was knowingly deliberately false. today as a consequence of obamacare, millions of americans lost their jobs and have been

forced into part-time work, lost health insurance lost doctors and are facing skyrocketing insurance premiums. so i can understand why the administration would be reluctant to defendant defend that record. i can also understand why the administration does not want to answer questions about the underlying legal questions. the statutory text is straightforward. and at the end of the day it is not a complicated question. what the administration did is took statutory language of an exchange established by a state and through transmotor fix indication that would make hari houdini shake his head in wonderment defined the federal government's exchange as an exchange established by a state. ...

about litigation reform. i was compelled to whisper to my staff counsel that i thought he got it exactly right. >> i hope that and is not used against you in your next campaign. [laughter] >> i just mentioned that at the outset as a way of saying that we may have issues but we will approach today's hearing with somewhat different perspective. i find it remarkable that the

witnesses request has ongoing litigation which is expected to be resolved very soon and they were not comfortable sending the witness under those circumstances. the witnesses are not in any way involved in it is my hope that we will move past this political theater and get back to the substance of the judiciary committee. thank you. >> will go ahead and give each senator the chance to make a brief statement before we move

on to the next panel in the senator on the side of the aisle will start. >> thank you mr. chairman. as a longtime practitioner in federal court 15 years practicing with federal judges i've developed a great respect for those men and women who lead those courts, the judicial process that we go through and the legal process that we go through, and in alabama and states all over the nation laws are passed executives enforced the law and the people expect that. that's the whole point of the american legal system.

the president of the united states is in fact a chief law-enforcement officer in america and has a duty to make sure those laws are faithfully executed and i've seen, in my time here, both parties acquiescing in the policies they don't like because the law spoke to the contrary. i don't think we have ever seen a president of the united states who is so willing to just ignore plane law to advance a political agenda. american people acquiesce in support decisions every day many of which they strongly disagree re- with but they acquiesce because that's our system. but part of their acquiescence is a grudging belief that somewhere somebody is following through on legal procedures and what's happening to them in the courtroom is a result of some sort of fair and decent process. i do believe senator cruise that we are not in a healthy

relationship right now. if we get to the point where the american people believe that the supreme court members are just advocating it and posing instead of faithfully following the interpretive law then i think we have threatened the foundation of this republic office. i think the strength of this republic is founded on the anglo-american rule of law that we basically inherited. we just celebrated the 800th anniversary of magna carta so thank you for having this hearing and i don't believe i don't believe the president is entitled to do what he wants to do no matter what the law says. >> thank you's.

>> i want to join with my colleague in expressing my appreciation for your very eloquent remarks this morning even though we voted on opposite sides of the issue. i think it's a topic that well merits attention and scrutiny. if i had been asked for my advice by these witnesses and i wasn't, i would have probably given them counsel that being here to talk about these issues, literally on the eve or perhaps before a few days before the supreme court rules on directly related pieces of law would have been prudent. it might've been perceived as improper. the timing of this hearing in

relation to the united states supreme court decision predetermined the outcome of their appearing. i would respectfully suggest mr. chairman, that these same witnesses be invited at some later point, certainly in consideration of the full judiciary committee, to await another invitation at a different time and i do not mean to suggest that the empty table was used as a prop or an argument that may be misconceived, but i would strongly urge that this committee revisit the potential testimony from these witnesses on another occasion.

i firmly believe that the right decision will be to uphold this law both the act itself and the overwhelming evidence that demonstrate its nationwide everybody understood when it was being debated, and when it was being passed that the tax credit would be available. the act would not have worked any other way. the universal coverage would not have been there without this. i welcome the scrutiny and oversight and hope that we will find a path where we can really, on a bipartisan basis, come together. thank you mr. chairman. >> senator hatch. >> thank you mr. chairman. let

me thank you for convening what i consider to be an important hearing. i'd also like to say that i am disappointed by the first candidate's decision not to be here today and testify. this is in them for an issue about whether obama care issues subsidies in the administrations represented to have won't even tech to us. you would think they would jump at the opportunity to tell the public how it affects the plan. i can only conclude that the administration refusal to participate today has no really good explanation. they decided early on that they decided early on that subsidies needed to be available if the law was to work the way the president envisioned and didn't care what the statute actually said. some of the things about this whole process are disturbing. the congress passed a hugely

controversial bill. and then they elect a republican to stop the bill from moving forward. the president decides to rewrite the law and didn't include what congress actually wrote. now you have them explaining how they arrived at this. these are the actions of an executive branch willing to bend the law for political purposes. many times president obama showed disregard to the law and this is just one example. last month there was an article with the elite ucla law review and how his rewriting of the law

has certain constitutional effects. i'd like to just quote from that article. the president's obligation to follow the law was not honored. the constitution doesn't give the president the right to write and rewrite laws. the power lies with congress. and until congress amends the statute they are bound to that. i asked that that be entered into the record. >> without objection. >> i'm glad we have some panelist that can talk about this. obama care provides no such authority to provide subsidies. i wish they would take this as

seriously as we do. i got tremendously involved in this because i've done a lot of healthcare legislation over my 39 years in the congress. i have to say one of the principal arguments by my son was that the people would have to go the exchanges would have to be set up by the state. the argument behind it was that was the only way you would get people to buy in for it because that's for the money goes. that argument was used on more than one occasion. all i can say is i'm very concerned about this whole issue. the statute is ambiguous. it's amazing to me that we've come this far without someone

admitting that they made a mistake. we have to rewrite the law so that we could unilaterally do what they just did. >> thank you. >> thank you chairman i want to echo the comment of my colleague about the comment of the empty chairs here. we have had the obligation to provide a device to government officials on how to respond when their agency is the subject of ongoing litigation and i concur fully with the remarks of senator blumenthal and his recommendation that the impediment is lifted and the chairman should consider having the witnesses return. i chairman should consider having the witnesses return. i think it could be a constructive hearing if it wasn't for that impediment which

i think is a real and genuine one. we did set up a a state exchange the we are not very affected by it. our state exchange has been quite a success and we just hit 500 businesses having achieved healthcare through our exchange which has a business a business plan and an individual plan. thousands of families have achieved coverage on major primary care practice groups that are adapting the way in which they practice to take advantage of some of the innovation programs. they are seeing better care for their patients their patients are seeing longer hours and simpler processes. there's more support for prevention and other types of less costly ways of dealing with people's health. we are seeing better care

delivered in a less costly way that is simply and clear and not contain confusion and duplication which was the hallmark of our healthcare system. that has just been approved as a nationwide a nationwide process because they were able to demonstrate the hundreds in thousand dollar of savings accompanied by better and simpler care for the individuals who may serve. i think we have a continuing process that we are obliged to pursue to make sure the american healthcare system, which remains by 30 to 50% more expensive per capita than all of the countries that we compete with.

i think that gives us an obligation to try to keep our eye on the ball and to make sure we are reducing the cost of care while maintaining, or likely improving, the quality of care that our people receive. there's absolutely no reason we should continue to be the country that has the highest per capita cost in the developed world and yet has healthcare outcomes that are measured by things like length of life that equate to countries like greece and croatia. we can do a lot better. the the affordable care act is a pool that's been proven to do a lot better than in my view the exchanges are a pool to continue to drive the health care system in that direction. away from duplication away from

confusion. unfortunately behind political language and the political fights that have accompanied the affordable care act, there's a lot of americans particularly those who had a loved ones or had a serious illness and have had to deal with the american healthcare system and have seen firsthand the complex burdens, the inefficiency and dabbling system it was. i think particularly in this area of lowering costs we want to encourage those breakthroughs to make us internationally competitive and to provide a better humane result for the people of the country.

i think the state exchange is helping our state manage that problem and steer itself in that direction. thank you very much for your time and my time is expiring. >> thank you senator whitehouse. senator whitehouse. i'll make a couple of observations and that will welcome the second panel. when it comes to discussion of cost, limiting healthcare costs all the merits that obama care has been subjected to he promised the average family would see a $2500 decrease in a $2500 decrease in healthcare premiums. i think you'll be hard-pressed to find many families whom that is the case. case. in fact many families have not seen any healthcare premium decrease. rather the health and insurance premium increase has been over $3000. that's $5500 different of hard-working americans struggling to pay the bills and they are discovering that under obama care they have less

coverage coverage, higher deductibles, higher co-pays and they're paying more. i would also note that the administrations justification for not being here and yet mr. mcmahon, one of yet mr. mcmahon, one of the three witnesses that were called here today, testified before the house oversight committee in january. the same underlying issue was pending. yet the administration sent a witness. here they are unwilling to answer those same questions about whether the administration is willing to comply with the law. the letter this committee sent to treasury jack lew on may 27, i'm going enter that letter into

the record and i'll hold it open for one week for any additional material senators would like to add. with that i'd like to welcome the second panel to the table and will start immediately. [inaudible] >> he is a lawyer and he has the

distinction of being my first call to the facts which i am sure they will hold them to account for all the mistakes they have made. we've got sir michael cannon who is the director of health studies and is a well-respected scholar on economics and healthcare. we have professor andy gray wall who is a professor of law at the university of iowa in iowa city. we have ms. elizabeth who is chief counsel of the constitutional accountability center here in washington d.c. we have mr. robert weiner who is a partner in our own supporter.

we'd like to ask each of the witnesses to stand and be sworn in. please raise your right hand is where the testimony you are about to give before the committee is the truth the whole truth and nothing but the truth, so help you god? >> thank you very much. we'll start with you. >> please turn your microphone on. >> i was just talking about the importance of this committee and the city senators have already indicated that the real issue of this hearing is the rule of law. this is going to be a nation covered by law pursuant to prerogatives or is it going to be a political pursuit. i think that's what happened in

this case. i don't think they interpreted the law but very dramatically revise the law. if you receive subsidies on exchange established by the state under section 1311 anyone who speaks english knows that's not a reasonable interpretation. the proponents have argued they can't this butte that the language commands the opposite of what it said so they tried to change the subject. they said while they took that language out of context but in reality either of those is true. in fact the context in which those words reside confirms in

every way that the language means exactly what it says and following that plain language is the only way will accomplish the broader purpose of the affordable care act. they act. they have argued this is an unusual place to put restriction on subsidy but the reality is this is the only provision in the act that fuels the availability of subsidies and the reality is the only section for example that makes it clear that you need to make a purchase often in exchange in order to receive the subsidies. it's the only logical place in context that makes it clear. the plain text of section 1311 of the act makes it clear that

the purpose of the act to say that the state is running the exchange programs and not the federal government. the state shall government. the state shall ask that blush and operate these exchanges. one of the principal problems with the irs rule is that it undermines that statutory language. since the irs rule makes subsidies of available regardless of whether or not states have established exchange, it makes no incentive. the irs ruled which is to have the states establish the exchanges. none can explain why anyone would of thought that most of the states would've done this if they were provided no incentive to do so and they can't claim any incentive other than the subsidies. the idea to have subsidies out there in all 50 states is an

imagination made up by the administration. therefore the purpose of the legislative intent is a unilateral imposed and contrary distinction of those in the legislature. it tells us what the limitation is in 36b. we have a section and 1311 that tells us why they impose that and there is no legislative history that contradicts over of those. any legislative material that any judge looked at, there is no purpose to justify the irs

provision of the code. i think code. i think the final point i'll make is that the proponents of the act even agree on the rationale behind why the irs provision was okay. you won't see that term of art during anywhere in the irs discussion after the time they did it. this was a post document mention and that is not what the irs came up with. it was a giant mistake that nobody understood what was going on and neither the irs has admitted that this is simply a matter of oversight. all of these arguments are actually at odds with each other. inc. you.

>> i'd like to discuss what we do know about how the irs developed the tax rule that's being challenged. two federal courts have found that rule extended the reach of their mandate. beyond the clear limits, congress imposed on its authority. they are suggesting more than 250,000 supporters. one of those workers is a jazz musician who is not far from here in northern virginia. according to the washington post he lost a thousand dollars of income in the first year that the irs unlawfully impose that mandates and on his employer.

it has eliminated nearly a quarter million jobs. it unlawfully extended its reach and had an illegal tax on 11 million people. the authority to levy taxes and spend federal dollars -- taxpayer is alleged that this has affected them and millions of other americans. they will rule later this month, it would create an estimated. [inaudible] it would increase their earnings

by $1000. neither of the bodies had statute. today for the remainder of my testimony had like to discuss the picture that emerges from what little we do know about how the irs developed control. the available evidence suggests that they recognize they did not have the authority to impose these taxes yet they imposed them anyway. they used legislation that was protected by congress in order to support this. they failed to consider -- their proposal to.

as far back as 2011 some members of this committee knew of this. there was no statutory support of the irs decision to explain meaning of the tax credit eligibility requirement in health insurance through an exchange established by the state. it contradicts arguments that the government offered to go to the supreme court. the term of art argument that was made what we literally know about the administrative is that the rs did not believe that. according to an article in the washington post which interviewed several members at the treasury department and irs

one official said the overriding concern was not generating negative news. in december 2011 then ranking member, senator hatch, sent a letter to the department of treasury after this proposed rule and before it was finalized, disputing the legality of the rule and asking the treasury department to turn over all documents related to this rule. the irs treasury department have been ignoring

that request for three and a half years. the irs is taxing and spending the american people's money without permission from or accountability to congress. we need to know how this happened and that begins with transparency. thank you very much for your time and i look forward i look forward to your questions. >> thank you mr. cannon. >> thank you mr. chandon. i expect if they had shown up today they would say they tried to carefully obey the statutory authorities when it registered things under section 36b. i want to say why that's nearly's nearly impossible to believe. i don't know whether obama care is a good idea a good idea or a bad idea but that's why i'm sitting in the middle. i do want us discuss three circumstances where other regulations clearly contradict the legislative language and if you think this is clear, anybody

could just come up with some colorful counter argument. it only grants access when their income falls in a specific income range. they didn't like that result so they had expanded credit to several persons below that amount. the statutes refers to 100% to 400% clear. the second circumstance is to related provisions. one provision says that if you're a large employer and a large employer and offer insurance to your employee we want you to automatically enroll all those employees in coverage and they will issue regulations saying as much. if you have much. if you have a plan, get everybody in there. as a sweetener to this, persons who are enrolled won't get credit under section 30 6b 36b

because they are going to be getting coverage under the employer plan. with no credits that means there is no penalty on employers when they automatically enroll employees in their existing plan. the irs did not like that so at some circumstance you will actually get it credit under 30 6b even though you are getting credit from your employer and the employer will get hit with a penalty. this also relates to unlawful aliens. congress recognize that some very low income individuals are here legally. josé will help you but please wait five years before you apply for medicaid. the statue section of 36b says will help you out on the state exchange if you were here lawfully, you yourself can get a credit for policies purchased on exchange.

the treasury has issued a regulation saying even if you are here unlawfully and you meet the requirements you are eligible for a credit. the statute is very clear that says you must be here lawfully to get this benefit of the special role. all of these three provisions may be good ideas in the abstract. they seem good on some levels but they clearly violate the language. includes going i want to talk about we don't talk about the expansion of 36b meaning more penalties from employers. unlawful credits lead to unlawful penalty collections. the fact that the irs is defending this is illegally collecting penalties from businesses should receive more attention. thank you mr. chairman. >> thank you chairman cruz, and the members of the subcommittee

for cruz, and the members of the subcommittee for inviting us here to testify before you today. i must take issue with the substance of premise on today's hearing. missed they said the treasury department rewrote the affordable care act when they said that tax credits would be available to all americans who need them. them. far from rewriting it i would assert that the treasury department applied it according to its tax statute designed when interpreted and made this role. similarly i must take issue with my colleague. what you just what you just heard him describe a few minutes ago is not how statutory interpretation works. that's not how anyone understood that law to work. republican and democratic members and staffers alike draft the law and no one understood the law to put clued credits to

those who elected to set up an exchange to himself. on contrary, members of the congress at the time submitted drafts at the time and assume tax credits would be available in every state on any exchange without making a a distinction between state run and federal exchanges. did any member of congress stand up at that time? did they have to admit when the supreme court asked him this very question? there were none. i'd like question? there were none. i'd like to backup for a moment to talk about the language itself. as they reiterated last year, it is a fundamental cannon that the words of the statute must be read in their context to have a

view in the overall theme. in other words not plucking a single phrase took achieve a single goal. it provides for these establishment of exchanges from which individuals can purchase quality, affordable health insurance. section 1311 provides that that each state shall establish an american health benefit exchange. it clarifies however that there is state flexibility in meeting this requirement. a state may elect to set up the exchange for itself or if they choose not to establish an exchange or not establish an exchange that meets the requirement then they shall operate such exchange within the state.

it refers to exchanges established at the state level by the state as well as exchanges at the state level by hhs standing in the shoes of the state. the act expressly represents income level by which an individual is determined to be eligible or not for these tax credits. not the bureaucratic entity which runs the exchange in that state. what about these phrase that they rule found in calculating the tax exchange. while you could pluck a forward phrase out of moby dick and say it was about a sunday will watching cruise but that's not how you read a book and that's not how the supreme court tells us you read a statute either.

this allows the provisions of the aca to work harmoniously which is something the supreme court has told us had should be a guidepost when reading statute. this is something the supreme court should told us we should avoid when reading the law. making tax credits law. making tax credits available to all americans who need them regardless of the state in which they live is the plain text of the law and allows the lot to what work in the way congress intended it. in term pretty section 36b in this way allows reform at the

heart of the law to allow them to work in the way that it was intended and is the best interpretation of the law when you read it according to way the supreme court tells us you should read the statute. i'd be delighted to answer any questions this panel has. thank has. thank you for your time and i'd be delighted to answer your questions. >> i can promise you none of us will be wearing robes. >> mr. weiner. >> thank you provided me to testify today. let me say first i think it is wrong or immature to be talking about a violation of the rule of law at a treasury department when the spring court may yet tell us and will probably tell us but they were right. that they were right. second i'd like to say that the affordable care act, in fact, is working. 14.1 million americans more have insurance than they did before. the uninsured americans has dropped from 24% to 13%.

the rate of increase in insurance premiums has declined. the third, that the importance would roll back that this project is they contend that the treasury department is charged with implement in congresses intense and found what they intended to do was to enact a self-destruct you statute. one that encourages states to set up their own exchanges by threatening that if they did not, they would impose a federal backup system that did not work. why would congress have done that when the whole point, why would they have had a nonfunctional backup as a threat when the whole point of the backup was to ensure that the statute did work in those jurisdictions.

why would congress plant a why would congress plant a timebomb in the statute anyway? well the argument is that the irs and the treasury department and those questions were off-limits because of the language that is so clear that there was only one permissible interpretation. so let me answer one more interpretation. so let me answer one more question and that's why would the states have an incentive without the partnership? and the statesmen themselves answered that own question when they amended the complaint that the state government alleged that the exchanges were coercive. why were they coercive? not because they threaten subsidies of citizens of those states that they didn't set up in exchange, the course of lawsuit said that because the states would heed regulatory authority if the federal government established control.

that's not my position that's the state's position. now the opponents really have to think and take the position that the statute has one and only one permissible reading because there is a strong presumption that you read statutes to be effective and you read them for their evident purpose. in the book of statutory interpretation, the argument you hear is that there is a self emulating interpretation that the treasury department was so firm _ they say it's crystal clear but crystal-clear but no one at the time the statute was

enacted was aware of it. in fact it was so obscure that it wasn't discovered. that's the discovered. that's the word that has been used, discovered, until months after the statute was acted by a lawyer whose announced mission was to find a statutory glitch that would take down obama care. it's just a one and only interpretation except for now. it is by authoritative interpreters probably for at least four members of the supreme court. many people were involved in the drafting of the bill and organizations, 22 states, organizations, 22 states, the former director, all of these people interpret the statute the same way the irs does. to say

that their interpretation is impermissible is to question their literacy or their candor and neither is really endowed. >> with regard to the irs in their process, truth is a defense. the irs engaged a process that produced a reasonable result one that was not as the interpretation opponents offered. it was one that was consistent with the commonly understood meaning of the statute i those who enacted it. thank you. >> thank you very much. i'd like much. i'd like to thank each of the members of this learned panel. i'd agree very much with the

testimony that this is fundamentally about the rule of law. this is fundamentally about the law. this is fundamentally about the question about whether the federal government can impose billions of dollars of taxes upon millions of americans directly contrary to the text of federal law. it is likewise about whether the federal government can spend billions of dollars explicitly prohibited by federal law. if the answer to the law. if the answer to the both of those questions is yes, if the administration's interpretation is a seated to and makes the entire constitution law macon function superfluous. if the have the ability to tax and spend directly contradictory to statute, it limits the executives authority. the legal question is not terribly complicated. the statute provides that monthly premiums are qualified

monthly health premiums enrolled through an exchange established by the state, the entire argument here is whether the federal exchange is established by hhs is an exchange established by the state. now several witnesses have taught testified that no one possibly envisioned that an exchange established by the statement in exchange established by the state. i would note that at least one person understood that very well. well. someone who has been described of one of the leading architects of obama care. professor jonathan who admitted that the passage of obama care depended on the stupidity of the american people.

professor gruber quite candidly said that it's important to remember that if your state if you don't set up an exchange in exchange, that men means your citizens don't get their tax credits. i know no one understood this or so we heard, but he understood it very well and as he put it it was up to the american people to keep it hidden. i want to focus on the decision-making process that occurred at the treasury and the irs. mr. weiner mentioned that no one is questioning the candor of the irs. it's difficult to make an assessment of that because there on willing to show or defend their decision-making. what i can say is they are decision-making. what i can say is they are not here. they are refusing to recognize the oversight responsibility of the senate. i'd like to ask you, mr. cannon you have examined this question closely.

what do we know about the decision-making process at the irs treasury in establishing the rules? >> unfortunately very little senator because as i mentioned before a request by senator hatch for all the documents related to the development of this rule has been ignored for the treasury and irs for three and a half years. in september 2014 the chairman of the house oversight committee, after being frustrated by treasury and irs unwillingness to release the documents to his committee issued a subpoena for those documents. they've been ignoring that subpoena since september of last year. >> let me stop you on that point because no one is doubting the

candor of the treasury of the irs. you are telling me they are denying a congressional subpoena and are denying to show up at this hearing? >> is that correct? >> while it has to do with a subpoena from the house committee, not a subpoena to committee, not a subpoena to shop at this hearing. yes they are ignoring a congressional subpoena to provide those documents. i think there was a suggestion made that if they don't show up this hearing may be a compulsive very compulsive could be set up. speemac's nonideal situation. >> up. >> is nonideal situation. >> my understanding is the staff was permitted to review some documents under highly restrictive circumstances. can you read describe those circumstances? do you understand those? >> the treasury and irs did release some documents, 386 pages, i believe a fair amount which was the final rule itself. about half of it or maybe a

fifth or 20% of it a fifth or 20% of it was my work that they just released to the committee. only about 5% even commented on whether there was any discussion with irs officials and it was never here are the factors we are considering. as for the documents that they have released, which don't tell us a lot. >> i understand they were allowed to review some documents that were not allowed to make copies or take notes. >> yes they were allowed to go into a room sometimes with penniman paper and sometimes without. they were not allowed to take any copies out of the room or make copies of the documents. on one occasion they were not even allowed to take notes. no. >> no transparency, refusing to

show up at this hearing. my understanding that they are fighting tooth and nail to not show those documents shows potentially that career staff analyze the phrase in exchange established by the state and concluding that it means exactly what it says is that an exchange is established by one of the 50 states. is that correct? >> i'm not sure about that but what we know and this is from where they had to take a pen and paper in an scramble down everything they remembered. they were allowed to look at different drafts of the proposed rule before that rule was issued. what we know is that officially they had included that statutory requirement that they be enrolled through an exchange by the state. around the same time, a treasury official raised an issue with

the irs and that language was dropped from the proposed rule. >> rule. >> mr. chairman i want to make sure this committee understands that. our understanding, to be clear the irs is not providing the documents so there is no transparency, but our understanding is that the initial draft of the rule is attempting to follow the law, followed law, followed the plaintext and concluded it had to be in exchange established by the state. but then subsequently it appears that political appointee at the department of treasure overruled that decision and implied a political judgment contractor contrary to what the law said. what we know.

>> what we know is that this happened around the same time that the treasury department intervene. we don't know what the discussions were intervene. we don't know what the discussions were about or what happened there. we do know is a statutory provision that was on its way to being implemented as a proposed rule and it was dropped. that significant because it tells us a couple things. one treasury and irs officials never believed that the statutory requirements through exchange with the state _-dash. >> some of my understanding is that these had initials or notations that indicated someone who had also worked in the white house policymaking. is that your understanding? >> there was white house input

into the development of this rule as there is in many roles. we don't know who provided that input. >> but the initial was written on one of these documents? >> i have not read these documents but that was said. >> me ask a final question. they are arguing that the coat courts oh deference to implement this law. i want to ask that if the process, quite deliberately the administration is blocking any evidence of whether not the sick kurt, but if so the career employees read what it means on its face value, and if it is the case that political operatives ordered those career professionals to disregard the

law and reach of political conclusion instead, is it your understanding that that sort of decision to disregard the law is the kind of decision that is orderly and usually given chevron deference? >> one of the things they can't do under chevron is act in an arbitrary or capricious manner. also in terms of process you're not just irs people. i don't think people. i don't think they just went through the pretense of pretending this was a mutual interpretation of the law. chevron is inapplicable here anyway because it's completely ambiguous and there's no opportunity for deference. there's a strong line that because this body controls the

purse, monies will come out of the federal treasury owner lee if that is done on ambiguously. >> thank you and i would hope that that if is done but they did not instruct career professionals to disregard the law. it's not surprising that they were afraid to come here and testify that that is what occurred and that perhaps gives us some context on why the panels first three witnesses chose not to come :

>> >> in a way that is advocated by some to have massive disruption with

millions including to affordable insurance is the cost increases significantly is my contention that it is not required. the text for the history of the law and the structure of that aca only needs to one possible conclusion that tax credits are available to all working class americans. as we all know we propose a california for the ideological reasons for the the fighting in the mandate in the courts have lost the al another group has raised another challenge is asking our cords in a way to sabotage a core provision with the way that the subsidies work so we were

not present the from those are actively engaged to suggest it runs directly contrary for those who were engaged in the implementation. and also senator stowe said we did not see any state extensions contrary to the understanding. and with any work for the

opponents that try to contort the letter of the law. so we begin from the time the aca was adopted it was understood to meet with treasury said it meant but what happened to create that dispute? >> no doubt at all that we see for example the statement several years after the statement was adopted. i raise it with four aces to senator hatch with in january 2010 that established saying in

exchange to receive federal funds. and to identify other people as well. and i mentioned with the states amended their complaint october 2011 in the america legislature council to tell the states and urging them not to adopt changes in to allow the federal government. in november 2012 to explain why it would not set them up. there is no operational differences with the state exchange for georgia and south carolina and west virginia all these states

that this is the way that it was understood to say that treasury department inc. the language into a early draft. >> they have urged us to read for words it isolation and. the supreme court national association of home builders said the meaning or ambiguity is only evidence were placed in context. how does that support the reading from the established a state or those for the state? you touched on this in your previous testimony.

>> this. gore has made absolutely clear that the statutes are to re-read in its entirety to a effectuate to defeat the central purpose and it is important to note basically there are three main features of the affordable care act. you have the individual mandate that insures that you sign up for health insurance or pay that tax penalty, if you have the and come to do so. the important market reforms to prevent insurance companies from discriminating from those with pre-existing conditions. and a tax credit which make it affordable for americans to enter the insurance

market is looking and not the statute as a whole for the supreme court but it is important to note the goal of the tax credit is the key purpose to make insurance available for all americans. when we look at the exchanges it is important to note who will run the exchange of the state establishes its own exchange according to sections 1321. the idea is that tax credits are available nationwide. but numerous provisions of volos are absurd if you take that reading that the treasury has put forth we talk about what congress

intended. again with the way that it is structured to achieve the purposes of the wall -- of a lot. the way it was scored by the cbo the way they've understood it to work this is a clear and congressional intent looking at it in context, looking against a backdrop of federalism to note if you take the critics of the treasury department to set up the exchange or which the statute to allow she do you equate millions of dollars and it doesn't

make some sort -- cents in the supreme court tells us. >> i appreciate your testimony. >> the fact you say that to make insurance available doesn't mean the statute could be written to effectuate some theory so to be faced without legislative responsibility so the deal with the challenge that could be difficult but the president doesn't get to make up paul lot as he has done so often it is troubling to me. with that they must do something.

but want congress fails to act and then he says no. that is what congress passed. and then to get away from statutory law. >> with cnn money. and humana up 30% to the biggest insurers in america. bowen that is even simpler conure steady with the affordable care act with

incomes between 100 and 400% of the federal poverty in the level. or you aware of anything else of the affordable care act to alter that number or that range? >> no. congress decided for aliens because they could not get medicaid but there is no a statutory exemption that the irs has affected by regulation. from what would appear to be plain language for citizens for several million people of 100 percent. of the federal poverty level >> it is 4 million people

but those that don't satisfy the 1,000 percent statutory for -- pelorus director you aware of any perception justified to add several million people when they don't fall within that range? >> precisely the rationality used and to cut off belinda% we will take billions of dollars from the federal treasury. we don't need no statutory language to do what is right to. it is the same analysis that is supposed to be available for all americans to do what we want.

sections and 3060 -- some citizens with the low income that are present that cannot obtain medicaid coverage. that is pursuant to the statute and to allow subsidies to the taxpayer or a member of the family and lawfully present taxpayer or family member is not eligible for the medicaid program for the statutory basis to find such an exception? >> absolutely not. that particular changes as

opposed to the other to go with the preamble to the regulation there is no explanation at all. without any hint to those that are not lawfully residing. >> we had a number of studies with that governmental administration that will know what is past the chief executive will follow that lot. you started the aca and is there any authority you can find to allow the administration for health care coverage for those that are lawfully present?

gimmick in the series of stark revisions with the obama administration has done pursuant to the analogy to make this better in the way that we want and then to craft those statutes that it is viewed as inconvenient. >> but the goal for health care for all americans. >> thank you. >> mr. chairman. thanks. >> you are geared for the plaintiff. this hearing has been

conducted with hyperbole a realm the affordable care act with the rhetoric as ronald reagan said the fact is that the affordable care act is working and has provided insurance coverage to millions of americans. and not only did congress intend a certain result but what they intended his actually happening to deal with reality on the ground. event in connecticut has a health exchange like 13 states to the there has been

cut from 12.3 percent down and 6% in they have qualified for the tax credit. millions of tax people across the country are now protected with discrimination based on pre-existing condition for years a inheres for those that were discriminated against for those that oppose pre-existing conditions there is mental health care that has been expanded along with the substance used in 62 million americans with 600,000 in connecticut so that a california and the public health prevention fund with canada can alone with tobacco cessation in obesity and health coverage those

effect support the argument to intend to certain consequences. as part of the statutory whole event context but i would like to ask with those statutes are the reality on the ground. >> just what congress intended. with the statute that the

goal was to extend the affordable health care to all americans but not a purpose intuitive buy us a judge but from what it was trying to achieve. >> senator sessions joked that the fact but the point of fact with affordable quality health care for all americans that is the stated purpose and it wouldn't make any sense for congress to have that tax credit eligibility. >> i assume you disagree? limit the model followed -- model followed we all agree

it was conditioned to do certain things. my friends on though left say it would be insane to end medicaid payments for the neediest americans pay yet they conditioned the medicaid on the state's because this body thought we could get the best of both worlds. this states than universal coverage that is precisely the same net -- the same to give the states the incentive for go there in isfahan to purposes the second and is available. the only way to accomplish both is the subsidies just like congress condition medicaid funds with the medicaid eligibility standards. there is nothing illogical

on less they say is ill logical. is a perfectly reasonable public policy. >> your friends on your left on our on our right. >> was giving a geographic not ideological. >> in the sense a different perspective and i respect your is. but congress established a system that works as a whole week to argue hypothetically but the fact is that congress did something good for our was not a part of congress at the time. with this area of a lot of humility.

fatwood be catastrophic for millions of families who owe their health insurance to the statutory structure that congress approves. not a perfect structure but in my view that is a human tragedy. i am hopeful that the reasoning that it would not succeed but the key for being here and all members of the panel. >> eight you very much a would note on the discussion that studies have shown the roughly 900,000 people have

received it that nearly as many have had their insurance canceled as those of have signed up in the data is compelling forcing people to medicate and up producing worse health care outcome. >> and more people are not going to the emergency rooms because they cannot get care. it is too long of a weight. also to bring out there were 30 million people that didn't have health care when with this issue and this bill. guess how many today? read 20 and 35 million. maybe you can make an explanation about that but i will just put the letter in the record if i can. >> without objection.

but with respect the reference to the supreme court's holding in south dakota verses dole. to address that is no law review article. just for the page that i address it to. but congress could not have intended to deny subsidies for these exchanges. but it isn't it a fact of very good reason to establish the exchange was

namely to incentivize the state's to create these exchanges. congress cannot order them to do that directly some incentivize to create exchanges. it is perfectly easy unreasonable. >> this body has had callus statutes the same way. with condition in subsidies with insurance reform provisions and the health care proposals also conditioned on the state corporation then this is the norm that the body continues use the debt than is to every provision since we cannot force the states but

we want them to take your operational role, the best traditional way is to take away federal funds to have them be cooperative partners >> that i would just ask this question as well. the passage from the most recent law review article what evidence of the president's position would have us believe that the statutes are malleable? to be established by the federal government what matters to them is the statutory purpose regardless of what the statute says. those of us on the other side insist it does matter.

but what matters with the statutes of the constitution would prevent them from doing whatever they want to. now the foundation of the rule of law at the you agree with that passage? >> i do. we're not taking them out of context. i said this about 400000 times also to the point that context reinforces the reasons i have already articulated and every turn that what it should me what it says. pooley words out of context and read in context it serves a sensible purpose there is no reason to depart

but what of the drafting of the obamacare subsidy rule. what do you take away from that investigation? twitter the most troubling things? of what shows to indicates to recognize the statutory language from what the statute said to exercise power and isn't a victimless scenario with those individuals that are subjected to the poll taxes because it ignores the clear language of federal law.

he has an income of $8,000 as a jazz musician that is a lot to you but a lot more to a jazz musician. those have been hit by $1,000. from which they are exempt. and it appears from what little they know that prevents them from doing that to disregard that. so it shows that the argument that led to a friend has made before the supreme court to put the reason they put that through

if it was a term that inc. the change of the federal government there be no reason to take another proposed regulation. keep it in there but they knew it was not. so they threw without. >> let me just ask you this. the statute is in big u.s. it could be sustained if only of recent decision making and that evidence is recent decision making what does that tell them? >> but they're arguing for that administration.

>> as a head indicated to the ideological agenda there is simply substituting their policies of the law and in addition 2.0 it strikes me as incredible and the solicitor general with the notion is that this body was delegated with the decision to have these subsidies that is very important to the act this was not filling in that gaps but the basic policy decision. that is precisely the question at issue congress made a decision so there is no room for the irs let alone white house operatives to change the face of policy decisions.

>> let me ask a professor. >> you have identified other regulations with the obamacare subsidies debt charily for those recipients. for those outside the statutory income range. they had genetically e in role in the health care plans with some am with the authority to grant subsidies with the general manager. >> if the regulation is valid it is impossible to believe because they did not pay attention to the statute. it could be that is valid

but with so many instances they are implementing the of what to see enacted from what actually was. >> i appreciate the extra time and i believe we have heard to the millions of residents there have not established state the young people fresh out of college but they try to exact hurrians of dollars from each of you too little but

to live in a state with the exchange? we have heard the obama administration is trying to impose on you personally thousands of dollars of penalties that are flatly contrary to lot. the penalties coming from the individual mandate is disproportionately hurt those moments those hurt by illegal taxes are not though warren buffett's of the world with the young single moms are hispanic or african-american suddenly finding a big tax bill do from the administration that has been ignoring and violating federal law. and with the test with the panel has given the career professionals recognize there were bound by law not to collect those taxes. from millions of people who did not owe them and tell

political operatives, the testimony suggests overrules them and instructed them to disregard though lot to collect taxes. from those who could not afford them. that testimony is quite stunning that every american ought to consider i would like to thank each of the witnesses from the subcommittee we will keep the hearing record open for an additional five business days. that means it will be closed as the of the close of business next thursday, june thursday, june 11, 2015. senator you want to make closing remarks? >> thank-you. we came to the hearing today the history and structure and purpose and impact. thank-you to witnesses for their testimony but we leave

with sharply differing views with what the purposes of the hearing in my view this is another part of a five yearlong effort to deny working-class americans any help to afford health insurance now the opponents try to give a contorted view of the letter of its very spirit and i too will raise the specter of a tax increase because it finds the idea that every american should have access to affordable health insurance if they're willing to a dance that would really raise taxes for 7.7 million americans to destabilize though lot in the effort to bring it down for a whole affair not successful and instead the affordable care active as improved.

thank you for holding this hearing. >> to the of members of the panel hearing is adjourned. [inaudible conversations]

[inaudible conversations] i.m.f.

it. runs about 35 minutes. >> good morning, everyone. thank you for coming to this press conference on behalf of the international monetary fund . today the topic is the united states 2015 article four consultation. mr. rice: as well as the financial sector assessment program and the press conferences on both topics.

i am very pleased to introduce to you this morning the managing director of the i.m.f., christine lagarde. immediately to her left is our director for the western hemisphere department, alejandro werner. to her right is the mission chief for the united states, nigel chalk, and immediately to nigel's right is aditya narain who has been intimately involved in the financial sector assessment. ms. lagarde: thank you very much. welcome to this briefing on the united states. by now i spoke you -- i suppose you will have seen our concluding statement and i will briefly summarize our findings and then take your questions. but first of all let me note that this year we have focused

a lot of the findings on the financial sector assessment. we do a financial section assessment every five years and all -- in all countries. it's a comprehensive exercise and the overall report what have we call the fsoc will be published on the eighth of july. the concluding statement includes some of the key findings but all the details work, the underlying assumption, the policy recommendations in the full extent, to the full extent will be found in that paper which is due to be published on july 7. that i highly recommend to you. we have also obviously commented upon the status of the dollar as a currency and we have also commented quite extensively on the timing of the interest rate hike expected

at some stage in the future. i'll come back to that later. but before we get to policies, let me say a few words about how we see the u.s. economic outlook. again we meet against a background of a shaky first quarter of the u.s. economy. and will you have seen that we have revised our growth forecast down to 2.5% in 2015. this is largely due to those factors that affected the first quarter. but this is not our main message, because we believe that this is -- does not actually indicate sub stantive material trends in the u.s. economy. our main point is that we still believe that the underpinnings for continued expansion are in