we cannot sit idly by and just watch that country disintegrate knowing that theory is leaning now toward a breeding ground for terrorists. -- syria is leaning now toward a breeding ground for terrorists. there is no border between syria and iraq. which means iraq would become a breeding ground for terrorists. those terrorists would make land again to harm americans. i said, mr. president, you have told us you've got potential airstrikes on the table for discussion. as long as you've got a goal set and you do it right, this is one member of the senate that is going to support you. i have been supportive of the president's action to try to attack these individuals, to slow them down, hopefully take away some of their weaponry and give the iraqi forces the

opportunity to defend themselves, and defend the freedom of their country. just as tyler and i were coming in today, we got word that not only has a new prime minister been appointed, but that prime minister has named a new president, and it is not mr. maliki, which is a good move. he needs to move on. an individual who is a shiite who actually work for maliki and is the speaker for the current iraqi parliament, he is the individual that has been named the president. i will take that as a positive step. and hopefully we can see a government that can stand together and defend democracy. and let's not kid ourselves. iraqi democracy is not what we think of in the united states, but what is best for the iraqi people is what we should want there.

and yet, we've got all of these scenarios swirling around the world. and here we are in america dealing with another crisis of our own. my friend, admiral mike mullen, the chairman of the joint chiefs of staff, has continuously said that the number one national security interest for the united states of america is not al qaeda. it's our debt. we are today spending about $227 brillion a year in interest paid payments on $17 trillion of debt. if you let interest rates bump up a little bit, and can you imagine the direction those payments will go? on the current scale, the current direction our country is going from economic standpoint, in the year 2020 and that is not very far away, our interest

payments will equal the amount of money we spend on defense. and if we don't change things between now and 2030, all of the entitlements that we pay for in this country will exceed the amount of tax revenues that we take in, so that everything we do from a discretionary standpoint -- i.e., defense, housing, basically all of our social programs, all of the discretionary spending, veterans, all of that money will have to be borrowed. who will pay it back? it's not our generation. it's these young folks, some of whom i see out here today, who will have the responsibility of paying that back. that is not right. we need to have a long-term plan to pay that mortgage off. we need to have a plan in place

that tells the next generation of americans, look, we inherited a great country. we will do everything in our power to make sure you in here at that same great america. and i will tell you, if we don't stare this problem down and we don't fix this problem for the next generation, they are going to be the first generation of americans to inherit a country that is not as great a country is the country we inherited. i've worked very hard with two other republicans and two other democrats to try to address this problem. unfortunately, we got to a point where folks will have to make hard and tough votes. we were prepared to do that, but we simply could not get that idea and concept to the floor, and could not get encouragement from enough other folks, particularly in leadership, that they were willing to bring these hard and tough votes up to the floor of the senate so we could

begin to solve this problem. it's not rocket science as to what it's going to take to solve this problem. we are spending too much money in washington. you've got to cut that spending. we've got to reform entitlement programs. otherwise, we are going broke. they will not be there for the next generation. and thirdly, we need reform a very broken and outdated tax code. if we do it in the right way, we will generate additional revenues. the combination of all three of those will solve our problem long-term. and i hope by the end of this year that we will have a foundation that we can build t upon by the next group of the members of the senate and house to address this problem head on. i'm here over the next couple of days speaking at a cyber security conference down in palo alto tomorrow.

cyber security, in my opinion, or the issue of cyber, is the next battlefield that america will be fighting on. the russians, the chinese, the iranians are masters at attacking us from a cyber standpoint. we've got to make sure that we have the capability to respond to those cyberattacks. i will be talking with some very smart folks down in silicon valley in the next couple of days about how we are in approaching it from a policymaker standpoint. we are going to need to work hand-in-hand with those folks and other folks around the world in the private sector to solve this problem and to put in place a program that allows the protection of the private sector as well as the public-sector for

these kind of cyber things we are seeing every single day. when i came to talk to you, feinstein said, don't talk very long, but take lots of questions. [laughter] i'm going to stop. i look forward to your questions. thank you very much. [applause] >> we do have questions. thank you very much, senator. i am the editorial page editor for the san francisco chronicle. pleased to be here with senator saxby chambliss, republican from georgia. you can catch up with us on facebook and twitter and you can see video on our youtube channel, or in this case, we are pleased to join c-span. let's get to some of these questions. there were a number of questions. you touch on a number of rich topics. a number of questions came in on your observations about iraq,

particularly about the fact as you indicated that the intelligence was basically there, that you could see what was developing. a number of questions as to why it took president obama so long to respond and whether you think it could have made a difference if he had intervened earlier. >> well, first of all, the information was -- i remember very well a briefing we had from lieutenant general mike flynn last friday with the defense intelligence agency. that briefing from general flynn took place in either december or january. and i remember him talking about this core leadership of this group. back then, they were isis, and now they have spread into syria.

they want to not just move in iraq, but in surrounding countries like jordan and others. but i remember talking about these folks becoming more and more radical. they are becoming more and more militant. we've got our eyes on them. and we are concerned about what action they will take. but what john brennan, the director of the cia could not predict is what i have alluded to, and that is, the reaction of the iraqi army. and the president got the same information we got. he wasn't getting anything or hearing anything different from what we heard, but at a point in time when we saw mosul fall and we saw this group, called isil, who wants to create an islamic state from syria to iraq to jordan and as far as they will

go, it really is a much more militant islamic state then we see anywhere now, it may have been the time to act. you never know. i'm not saying the president should have done something the day that the attack on mosul took place. but he's got a lot of smart people around him from a national security standpoint. he, obviously, was not being advised by them to go on the offense against this group. it's pretty easy to sit back now and say, if we had, we would have slowed it down. i do wish he had, as a smarter of course, weeks ago, instead of now, versus months ago when all of this started.

but as i say, we -- blame game doesn't get us anywhere. we are where we are. and going forward, the president said this is not going to be easy. he's right. he said it's not going to be solved in the short term. he's right. he said we're not going to put boots on the ground. i hope he's right there because nobody wants to see american boots on the ground in iraq. i assure you. >> i think the word that scares -- the phrase that scares a lot of americans is mission creep. the president indicated over the weekend that we are looking at a matter of months here. how do we avoid mission creep? and what role do you think the senate and in particular is going to play in trying to contain this? >> the definition of mission creep is in the mind of the beholder. some folks say we're there now, just by going in and carrying out air strikes. i don't believe that.

i think the president has been deliberate, some would argue maybe too deliberate, but he has been deliberate in justifying in his mind the decision that he made i guess last friday was when the decision was ultimately made, carry out the air strikes. but he also had directed that this -- these air strikes be put on the table, that the planning begin. you don't just decide you're going to do that and a couple of hours later f.a.18's taking off from an aircraft carrier. the planning was in place so that when he did make the decision the f.a.-18's could carry out the strikes. as to where we go from here, what extend we'll go to relative to additional offensive action there, it's all going to be dictated by what happens on the ground.

we know, for example, that the isil forces are now gathering women and children around them. it's a favorite tactic to use women and children as shields. we're committed to not having collateral damage. that just means innocent people being injured or killed in strikes that we carry out. that's going to become harder and harder to do. if these strikes are going to be successful, they'll probably have to be done in a little bit different way and somebody at some point in time hopefully is going to be 100% the iraqi boots on the ground that carries the fight to the enemy there. >> how do you make the case to americans that this is in our national interest to stop isil? >> it's in our national interests from a couple of very obvious perspectives. number one, we've got people on the ground there. we have a diplomatic corps still

in iraq. we spent -- whatever figure i give, it will be the wrong figure -- but my recollection is about $25 million on an embassy in baghdad inside the green zone and we have a staff there. we have american interests in iraq. we have an economic interest. we have american businesses in iraq that certainly we have a diplomatic responsibility to. in addition to that, we know for a fact that terrorist groups and would love to have all or some part of iraq to carry out training missing for the long term to plan and ultimately carry out missions against americans or american interests in any part of the world that they can find a soft spot but ultimately they would love to plan those actually come to america.

we can't let that the happen. we allowed that to happen unfortunately in afghanistan leading up to 9/11. we learned a lesson from that and now we're trying to make sure that we do carry out the methods that are necessary to keep those folks from being able to train bad guys from coming to america. >> you mentioned the change in leadership in iraq. although maliki is suggesting he won't go quietly. do you think a unified iraq is a probability or something we should be aspiring for? >> as i said earlier, a unified government or a democratic form of government in iraq is not what americans would look at and say, wow, that's kind of a mirror of america. it's a different culture. it's a different mindset and it's pure and simple, a

different people with a long history of conflict, a long history of economic troubles, a long history of living in a neighborhood where those type of conflicts and economic difficulties have been a way of life. so what we would love to see, obviously, is a new leadership come in with a regime that puts economic policies in place that give young people hope inside of iraq, that give young people an opportunity to earn a quality of living that will give them a quality of life to raise their children in a better atmosphere than where they've been today and where they've been for the last several years and then be able to unify sunnis and shias and kurds together in a way that will allow them to defend themselves from a military standpoint.

that is a very, very difficult proposition. but it has the potential to be done and we've got to be there in a support role all the way to the end to try to make sure that this new leadership that's coming in as we sit here today, that they're able to unite the parliament first and create a new government which they've been charged to do, that will allow that movement towards peace and at the same time allow the military to operate in a defensive and offensive way to ensure that peace. >> do you worry that a few years after we withdraw from afghanistan we're going to be going through a similar situation there? >> absolutely. it's one of those things that keep me awake at night because i know what's going on inside of afghanistan from the standpoint

of what the taliban is doing. they know we're leaving. there's still a lot of activity inside of afghanistan from a offensive standpoint. we all know, unfortunately, and our hearts and prayers go out to the green family, but we had a general that was killed last friday, highest ranking army official that has been killed since vietnam. so it's still a very dangerous place today. but that's an indication to us that when we leave it's going to get more dangerous. >> let's turn to some of your work on the intelligence committee. there's been a lot written and discussed in the past few days about the report coming out on enhanced interrogation techniques. you've been very critical of the report, suggesting it was politicized. >> and i'm still of that mind. you know, we're 13 years away, now, from 9/11.

after 9/11 happened, after we saw two planes hit the twin towers, a plane hit the pentagon, a plane go down in shanksville, pennsylvania, in excess of 3,000 americans were killed by an outfit called al qaeda that nobody in america basically had heard of to any great degree. i remember jane harman and i got our staff who were very familiar with al qaeda to make a presentation to all members of congress. we invited all 435 members of the house to a meeting where we had our staff explain what al qaeda is and what we were now facing as americans from a military standpoint.

if we captured some of those individuals, people wanted to make sure that we got the right kind of information from them that wouldn't allow september 11 to happen again. the further we've gotten away from that, the more difficult the issue relative to detention, interrogation has become. c.i.a. was charged with a responsibility that was new to them. they're not in the detention and interrogation business. they're in the information gathering and intelligence business. but they were charged with putting together a program which, in effect, they were told, if we capture a high value target, then we're going to turn these individuals over to you and you're to interrogate them and you're to get what information you can from them and you're going to do something with them. that was before guantanamo was ever created. that's what they did. it was not the best program in

the world from a rendition detention interrogation standpoint, but the c.i.a. and the white house told the justice department, look, here's what we're going to do. give us legal opinions as to what we can do with these individuals. they got those opinions. and they operated within the legal parameters that they were told by the department of justice. i happen to think that we got an awful lot of information out of these individuals. and in our report, we're going to document some of the information that we obtained from those individuals. there will be a forever argument about whether or not the enhanced interrogation techniques that were used went above and beyond, and that's an argument that i'm not going to defend the c.i.a. they're very capable of defending themselves. but the fact is that we got a

lot of information that ultimately in all probability saved american lives because we thwarted and disrupted potential plots down the road. >> as you note, it seems there are two elements when we talk about enhanced interrogation, or torture, if you will. one is, is it legal and ethical? and the second, is it effective? on the latter point in terms of effectiveness, you suggest that there are -- there is evidence that it has been effective in getting valuable information. how much of that is going to be available to the american people where it can really be convincing? because there is a lot of debate as we're seeing with the senate report. >> well, the senate report itself, that was done 100% by the democratic staff, is 6600 pages. it cost about in excess of $40 million and it's taken place over a period of five years.

there was, in compiling that 6600 pages, there was not one single interview conducted of an individual. it was all done by reading documents that the c.i.a. and others had completed after or during interrogation and what-not. the c.i.a.'s going to have a response to that and say that if you had asked us about this, here's what we would have told you. we have minority views that take the position that substantive information was gleaned from those individuals. we will give certain specific instances that will not be redacted. there will be some redactions in there. we can't reveal sources and methods. the 6600 page report will not be released at this time but

there's a 500 page summary, a response from the c.i.a. and minority views that will all be released and my understanding is that about 85% of all of those documents will be released. about 15% will be marked out with a black line. so that's a pretty good amount of information that's going to come out. diane wants more than that. they're in discussion with the white house on that now. >> i saw in your interview with "face the nation" that it was your opinion that water boarding is not torture and that it is consistent with the geneva convention. >> that was not my opinion. i never gave my opinion on water boarding. what i said then was that the white house and the c.i.a. consulted with the department of justice, here are the techniques we're going to use and they were told that under u.n. convention treaties, apparently those types of techniques are within the

treaties. but that's not my opinion. that was d.o.j.'s opinion. >> what do you make of the argument that some make that that has -- that the use of these enhanced interrogation techniques has put americans at greater risk when they're captured? >> well, you know, there was a reporter from the "wall street journal" who was captured by al qaeda and they cut his head off. >> daniel pearl. >> we can cite any number of instances where there's been terrible treatment given to americans whether they were military or not that have been captured. al qaeda doesn't know what the geneva convention is. isis, isil does not know what the geneva convention is. we train americans, particularly our special forces, individuals, in what we call siri techniques

that include very harsh treatment during their training in preparation for a point in time for when they may get captured. i -- i would hope that never happens. but, folks, we have to be honest, we can't kid ourselves. these are the meanest, nastiest people in the world that we're dealing with. they flew an airplane into the world trade center knowing they were going to die, but yet they looked forward to it because that's their mindset and those are the individuals we're dealing with. these are not bank robber out there. these are -- these are killers. and we need to -- we need to remember that, that if -- if they capture americans, whether they're military or not, they're

not going to be dealt with in a very pleasant way. >> here is an audience member question, speaking of the c.i.a., are you concerned that the c.i.a. has monitored your investigators' computers? >> yes, yes. i am very concerned about that. not only am i concerned about it, we know they did it. it was not right. it's not just a violation of the constitution because it is a violation of separation of powers, but this is work that i -- i say that, the whole staff that works for the committee is diane and mine both staff -- but that was our staff working on those computers. c.i.a. had no right to encroach on the work that they were doing. i don't care whether our staff did something wrong or not, the c.i.a. had no business going into our side of the computers and i expect director brennan to deal harshly with those individuals who, whether they

did or not, i'm going to leave that up to the accountability board, but if they worked for me, i would have fired them. >> what about mr. brennan? should he be held accountable? >> is the o.i.g. made an investigation of our side of the computers and the inspector general made a specific finding that john brennan did not know this had taken place. when he found out it had taken place, he ordered it stopped immediately and he immediately called chairman feinstein and me and came to the hill and briefed us within a matter of a couple of days. he then came back and briefed us again when he found out what had happened. so he kept us fully informed and so i have no reason to disagree with the finding of the inspector general. and if john knew it, it would be different.

but because he didn't know it, i expect him to deal with his employees directly but john brennan, as far as i can tell, did not know this was going on. >> let's turn to the issue of the national security agency and its surveillance, particularly domestic surveillance. senator patrick leahy recently introduced a senate version of a bill that would rein in the n.s.a. to some extent. i saw where you were quoted as saying it's going to be very difficult to get a bill out of capitol hill given that the house has passed a different version. what is your view in terms of where the line should be drawn on n.s.a. surveillance? >> well, if i were concerned that anybody at n.s.a. was listening in on a telephone conversation of anybody sitting in this room today, i would be totally outraged.

but again, we get briefed on these programs on a regular basis and i have been to n.s.a. any number of times, i've watched what they do. that's part of our oversight. that's part of my responsibility as a representative of you, and diane's responsibility as a representative of you, to know what these programs are and to know what they do and to know how far n.s.a. is going with programs of this nature and we do -- there is no program in the intelligence community that is more highly scrutinized than what we call the meta data collection program that n.s.a. has been operating. after 9/11, congress approved what we call the foreign intelligence surveillance act that gives n.s.a., gives c.i.a. and our other folks in the intelligence community certain

power and authority to try to deal with the bad guys around the world and to gather -- use every tool possible to gather information from them. section 215 and section 702 are the two provisions in that bill that gives the n.s.a. the authority to collect telephone numbers from individuals around the country and around the world and to store those. but this is the key. they store them. telephone companies store them today. they have ever since we've had telephone companies. this is the n.s.a. simply storing those numbers and not being able to access those numbers without a court order. and you would like to think that would give people some comfort that n.s.a. is -- is only going to look at telephone records of folks who are carrying out

activities or not in accord with u.s. law and that are in opposition to u.s. interests. unfortunately when you have a revelation like came out of mr. snowden, all of that changes. unfortunately, some of the things that mr. snowden could happen can't happen and i can't talk to you about them because they can't happen. keith alexander, the just retired director of the n.s.a., has talked in more detail about some of those things. but there is reason to look at a program like this. there is reason to try to make it more transparent. i think americans ought to know what we're doing but i can just assure you that nobody's telephone record is ever authorized to be looked into

unless there is a case made to a judge, a federal judge, that this individual is engaged in terrorist activity or he is engaged with some individuals who are engaged in terrorist activity. therefore, i mean, i have been a supporter of the n.s.a. on the 215 program. i do think we ought to make it transparent. people ought to know how many times it's accessed and you would be shocked to know that we've accumulated millions and millions of telephone numbers but only a very minuscule number of those telephone numbers have ever been looked into from a content standpoint. you get your telephone bill every month. it's got the day you made a long distance call, the number you called, the length of time you

talked and what it cost you to make that call. that's what we call meta data. and that's the information that telephone companies keep and that n.s.a. has stored. nobody can look at that information until a judge has issued an order saying, based upon the information that has been presented to me as a judge, i think it's in the national security of the united states for that number to be modified. we've done that on the mob, for example, for decades. you get a court order and you can carry out a wiretap on them. it's the exact same scenario. it's just a different program that we're operating under. >> let's turn to the debt and the deficit which your comments drew a number of audience questions, including this one.

president obama lost me when he appointed the simpson bowles commission to up with ideas to reduce the debt and then ignored its recommendations. do you think there's any hope for something getting done in washington? >> mark warner and i got together in the summer of 2010 and we began talking about this issue regarding the debt, the deficit, and during that period of time, republicans were out campaigning, democrats were out campaigning. this was in the senate. and nobody was talking about the debt and the deficit and yet we knew that this is long range the biggest issue that we're all facing and that's kind of what started us. we also knew that the president had appointed this commission that became known as the simpson bowles commission and that we

knew that in december of 2010 they were going to issue a report. and we didn't know what it was going to say. but what was really ironic about that is that as mark and i talked to any number of individuals around country, experts from the business world, the world of economics, professors as well as government individuals, individuals in the government who understand budgeting and the direction we were going, we came up with some similar conclusions and the conclusions that i said earlier are what has got to happen if we're going to really solve this problem. and that is, you got to cut spending. you got to reform entitlements and you got to figure out a way to get revenues up and we do that through reforming the tax code.

simpson bowles came up with a plan that is almost that simple and the person that asked that question is exactly right. i mean, the president had every opportunity to take some action then but what he did was just pat erskine bowles and al simpson on the back, said, guys, you did a great job, and we're going to put this report on the shelf and we're going to let it gather dust. none of us agreed with everything in that report but i wish the president had just said, i don't agree with everything in here, but by golly, congress, this is a foundation for y'all to begin to work on and if we had done that, then i think there's a reasonable chance that, with the president really pushing it and providing leadership, that we could have gotten something done. i still think that foundation is there. that's exactly the premise that the gang of six concluded on and they're now only going to be three members of the gang of six left in the senate but hopefully -- and i know how committed those three guys are -- they're

going to carry the work on. >> we had questions, including this one, on the lack of action in congress generally. and that is, if gridlock continues in the next few years, do you envision either, one, the tea party breaking from the republican and becoming an independent party of its own, or, two, moderates from democrat and republican parties getting together to form a new independent party especially since more and more americans are becoming independent. >> people have a right to be frustrated with washington. i'm frustrated with washington. when i got elected in 1995, that's the first political office i'd ever run for since i left law school and i was fortunate enough to get elected but i ran on a platform of term limits.

i thought six terms in the house, two terms in the senate was plenty so i never envisioned that 20 years later i'd still be in washington. we haven't done a lot of things -- we haven't addressed a lot of issues that needed to be addressed over the last 20 years but even when we did, we would make a decision that something ought to be done and then it would take two, three or four years to actually get it done. that's a frustration to me. and it's one of the reasons that led me to the decision not to run again. i particularly became frustrated over this fiscal issue. mark and dick durbin and kent conrad and mike crapo and tom coburn and i spent hours and hours and hours together and our staffs spent more time than that together looking at this issue of the fiscal problems and i say

on the stump and i mean it literally, i spent more time with mark warner than i spent with my wife for about a two-year period. but we're concerned about this and we know what the answer is. and when we presented the answer to a group of senators one morning in july of 2011, there was not just general acceptance that this is the direction in which we go, but there was general agreement that this is the direction in which we ought to go. and then we were frustrated by some outside interests who don't want to see entitlement reform. we were frustrated by outside groups coming in and saying when you talk about raising revenues, you're talking about raising taxes and we're never going to do that. that's not right. you don't have to raise taxes and you're not going to

eliminate medicare, social security, those valuable programs we all depending on. we're just going to make sure they're here for the next generation and if we don't do that, they're simply not going to be here so all of us as members of the gang of six and then mike bennet and mike gillians joined us later to make it eight of us. all of us shared that frustration with congress and the inaction of congress that members have that people have out there now. i don't think the tea party is going to do anything but continue to support conservative candidates. listen, i get sideways with them every now and then. but i believe basically in what they believe in. they're good, hard core american values. but, you know, we've had ups and downs in the political world in this country for in excess of 200 years and if we had c-span

or cable tv back jefferson and adams ran against each other, you wouldn't believe the nasty ads they would have run against each other. >> why do you think, when you talk about these fiscal issues like the prospect of this interest that we're paying on the debt of $200 billion plus a year and what even a modest rise in interest rates can mean, why don't you think -- why is that not resonating with the public in a way that would overwhelm these interest groups that are trying to -- from right and left -- who are trying to prevent reforms? >> i think the problem right now is that we're seeing the economy improve a little bit. i say a little bit. it's a very dad gum little bit. but there is hope out there and i think people sense that and we've got so many other things going on. golly, it's hard to believe that

it's been a couple of years now since we lost an ambassador in benghazi. that was front page news for so long. then you had the -- the situation in the ukraine. that was front page for several days. we got the situation in syria, that's been front page. you got the situation in iraq that's now front page. this world is just so complex right now, that it seems like one crisis after another develops and then the previous crisis goes to the back burner but this is one crisis that's not going away. and people are going to feel it more and more when they write their check on april 15. and i think people are going to become more and more upset about the inaction on the part of congress to address what mike mullin has continually said is the number one issue, and he's right, from a national security standpoint, that it's our debt.

so we're going to continue to talk about it and hopefully keep it at the profile it needs to be. >> maybe it's amazing that we get this next question considering the crises that you laid out here domestically and abroad and the frustration at getting something done. what advice would you give for students interested in running for elected office some day? >> i cite my own example as a pretty good scenario. number one, i graduated from law school and i didn't have the luxury that my son had when he graduated from college. he said, dad, i'd like to take a trip to europe. i had to go to work. and i moved with my wife to small town in south georgia and we began our life in our community. i got involved in the community. you naturally get involved in politics. you got good friends that run

for public office whether it's city council, school board, congress, whatever. you need to support those individuals but you just need to be an average, ordinary american from the standpoint of raising your family, making the commitment to your church or your civic clubs or whatever your interests are, and when it comes time for you to get involved in politics, you'll know it. you'll particularly know when it's time for you to get involved from a candidate standpoint. i had a group of individuals who came to me after the re-districting process took place in 1992 and asked me to think about running for congress. as you say, i'd never run for public office before and i came home and told my wife that i was thinking about running for congress. she thought i was nuts. and i remember after i made the decision, i was at a fundraiser

one time and my daughter was there and she was, gosh, in college then, i guess, and i happen to overhear her talking to one of her friends and her friend said, why in the world did your dad decide to do this? my daughter said, the only thing i can figure is he's going through a mid life crisis and this is his response to it. but i felt a strong commitment to do something for my country. i was dissatisfied and frustrated just like folks are today and that's why i got involved from the standpoint of running for public office and i would just encourage young people to go out into the world and work hard, do everything you can to support your family, support your community, support your churches and get involved in politics. get involved in -- whether it's local or national politics and if it's meant for you to run for office, you'll know it.

>> unfortunately, with as many questions as we have, we only have time for one more. so i'll make it a softball for you, senator. who's going to be the republican nominee for president in 2016? >> it's not going to be me. you know, who knows. it's going to be wide open. i've got lots of good friends who certainly got it under consideration right now. we've got lots of good republican governors around the country, lots of good former republican governors around the country who would make excellent candidates. i've got one that lives south of me in florida that his family is a good friend. whether the country would go for another bush, i don't know. but he's an example of the quality of candidates who we've got. john kasich in ohio, scott walker in wisconsin. chris christie in new jersey.

i served with rand paul and a number of other folks like john thune who are certainly giving consideration to it. these are all really, really great men, all men who are committed to what's best for america and i think at the end of the day it will be a slugfest but the right person will come out and i look forward to campaigning for him in 2016. >> thank you very much, senator. saxby chambliss, retiring u.s. senator from georgia. also want to thank our audience here and on radio, television and the internet. i'm john diaz and this meeting of the commonwealth club of california, the place where you are in the know, is adjourned. [captions performed by national captioning institute] [captions copyright national cable satellite corp. 2014]

>> tonight we will hear from experts tasked with tracking lease read of dangerous diseases tracking dangerous diseases, an outbreak of pox in two americans trace to prairie dogs. here is a look. >> one of the reasons at cdc investigate animals is emerging diseases in people are often traced back to animals. one of these situations occurred in 2003. the first hint we had something had gone wrong, you can see in this picture, this is a three-year-old girl in wisconsin . she developed these very odd, this are being -- disturbing

skin lesions. i was the first generation of kids who did not get a smallpox vaccine. many researchers dedicated their early careers to eradicating the disease from the world. he took one look at the picture and said, that is smallpox. we were very worried, especially when a second case was reported a few days later from another part of wisconsin. these patients did not know each other. one is a three-year-old. one is a businessman. they had both been bitten by sick prairie dogs. our "diseasetch at 8:00 on tonight c-span. and on c-span3, american history tv, but is all tonight at 8:00 eastern on the c-span networks.

tomorrow on washington journal, foreign policy in the so-called obama doctrine with robert zarate and brian katulis. reporter for the washington examiner talking about his articles on congressional incumbency and proposals for a term limit. every morning starting at 7:00 eastern right here on c-span. here are some of the highlights for this weekend. friday at 8:00, looking at the civil war. saturday, the communicators visited the technology fair on capitol hill. author and former candidate pat buchanan. books onght at 8:00, hillary clinton and edward snowden. saturday at 10:00, daniel halper

and sunday morning we tour the literary sites of casper, wyoming. gro on c-span3, the ne league kansas city monarchs, the depiction of slavery in movies. and sunday, an interview with herbert hoover. let us know what you think about the programs you're watching. 202-262-3400. like us on facebook and follow us on twitter. the court of appeals issued conflicting rulings as to whether the irs has the statutory authority to give subsidies to individuals buying health insurance through the federally run exchange. the supreme court has been asked to hear the case. this is about one hour.

onthe issue was ruled upon july 22, 2014, often known as the second highest court in the land. what the court did in a case is that ruled the president of the united states is violating the law, and not in a small way. the patient protection and affordable care act of 2010, also known as obamacare or the aca, directs to establish health insurance -- the directs the state to establish health insurance exchanges. and if it does not, then it directs the federal government to establish an exchange within that state. it specifically authorizes the irs to issue subsidies to certain taxpayers who purchase health insurance "through an exchange established by the state" and though subsidies, because of their complicated and

interrelated machinery of the ppaca, those subsidies directly trigger penalties against the employers under the law, i the employer mandate, and against individual law as the individual mandate. despite the clear language of the eligibility rules for the subsidies, in august, 2011, the irs issued exchanges issued by the federal government as well as those east ambushed -- established by the states. by january of 2013, a development that surprised everyone, including me, 36 states, two thirds of the nation, had refused or otherwise failed to establish exchanges. and the federal government been established exchanges for those dates. in january of this year, 2014, the internal revenue service started issuing those subsidies not only in states that have established their own exchanges,

but in those that had not. and thereby, began subjecting -- not only offering those subsidies to 5 million people in those 36 states, but also began subjecting to the laws and individual and employer mandate tax to individuals and employers in those states. on july 22, the d.c. circuit ruled those subsidies are illegal. the court held this. the eligibility rules for those subsidies are clear that those subsidies are available only through an exchange established by the state. --the ppaca did not establish within the state within which it operates and because though subsidies trigger penalties under the individual mandate, the fact that the obama administration is issuing those subsidies in 36 states where it had no authority to do so, that means it is also giving the individual and employer mandate

taxes broader effect than they would have if credits were limited to state established exchanges. in effect, the court ruled that it is taxing and burrowing and spending tens of billions of dollars that no congress ever authorized. and that the president induce 5 million people to enroll in these exchanges by offering money he had no authority to spend, and that tens of millions of individuals are statutorily exempt from those taxes. the court reached this decision with reluctance, but because it will likely have significant consequences for the individuals receiving tax credits through federal exchanges. and i'm mentioning tax credits and subsidies here interchangeably, because they're

a myth that the irs makes to insurance companies. the court also said if that is a problem -- the really just payments that the irs makes to insurance companies. the court also said if that is a problem, it is one that can be fixed. the law was authored by judge thomas griffith, who the washington post described as widely respected by people in both parties and has been regarded as a sober lawyer and with an open mind. and he received praise from predominant democrats, including barack obama who convert them to that post. how did we get to this place where the second highest court in the nation has ruled that the president is violating a law in a way that could not only affect the insurance divisions of millions of people, the tax liabilities of millions of people, the fate of his signature domestic achievement, but even elections? what i want to do is tell the story of how we arrived here, how jonathan and i came to be working on this issue. when the ppaca became law in march of 2010, as john mentioned, what immediately took center stage where the challenges to the law's constitutionality. the state attorney general and others immediately began filing

lawsuits to overturn the entire statute. there is another storyline that was developing at the same time, but did not receive any attention. it began when the former department of justice official named tom christina noticed that the law authorizes subsidies only in exchanges established by the state, not through federal fallback exchanges. like every other feature of the law, this is almost totally overshadowed by the challenges of the individual mandate, the challenges to the laws medicaid mandate. christina mentioned in a 2010 presentation to the american enterprise institute. jonathan came across that in his research on the law. he mentioned it to me in an e-mail in august, 2011. i heard about it after the 2011 law was passed. at that point, we were still ruling on the constitutionality of the individual mandate. it was later that month in

august 2011, that the irs issued a regulation preparing to offer those subsidies through federal exchanges as well. jonathan and i were aware that was exceeding the irs's authority and we immediately began talking to reporters. at the time, we thought that this was a drafting error. i think i speak for jonathan and i know i speak for myself. i thought this was a mistake that the authors of the law had inadvertently made. but as we researched this, because what this feature of the law does is allow states to veto major parts of the ppaca's regulatory scheme. the says these that it makes available in the exchanges, the employer mandate, and to a large extent, the individual mandate. i assume, as most people have, that this was a mistake. but as jonathan and i research this issue over the past three years, we realized something that came as a surprise to both of us, this was not a mistake. congressmen to do this. people who wrote the ppaca meant to do this. that is not to say that those in

congress -- supporters of the law do not like this provision now. and most of those who voted for this ill were probably unaware of it. here is the statute and legislative history. the eligibility rules for the subsidies refer solely to subsidies established by the state. they use that phrase explicitly twice and never deviate from that language. whereas in other parts of the statute authorizing tax credits for small businesses who give their access -- their employees access through an exchange use that phrase, "an exchange."

this provision of the law does distinguish between the two consistently. the law also defined for those who are not sure what "state" means, the law include the definition. the defined to mean the 50 states, plus the district of columbia. we have an example of congress deeming a nonstate to be a state, and thereby authorizing the subsidies within that policy. similarly, the statute says if a territory create such an exchange, shall be treated as a state. again, you have congress drawing an equivalence between something that is not a state and the state, so residents of that policy will be eligible for substitute. simply put, the entire statute is fully consistent with the requirement that taxpayers be enrolled in state established exchanges in order to receive the tax credits or subsidies that are available through the exchanges. the statute is clear and consistent and unambiguous on this point.

as of legislative history, the most important thing to understand about this provision is how little legislative history there is. there are three interrelated reasons for this. first, as the new republic's jonathan cohen told npr in january, 2010, exchanges got very little attention in the additional -- the initial debate over the flaw. and that is because "it is not a hot button issue" like abortion or public option. there were much more high-profile issues being debated. there is some talk about the difference between a house approach to exchanges, which would have had one nationwide exchange run by the federal government, and the senate approach, which would have had exchanges run by the state. but it did not receive the attention these others issues -- other issues received. the second reason is that it was

unremarkable. offering subsidies to residents of states that in a programs and withholding subsidies from those states that were uncooperative is something that congress does all the time. it does the exact same thing elsewhere in the ppaca when it threatens to revoke subsidies from state that did not implement the laws with medicaid expansion. a third reason is that with only rare exceptions that prove the rule, everyone in congress expected that all states would salish exchanges. that is another reason -- would establish exchanges. it is in the reason why this did not receive much attention. -- another reason why this did not receive much attention. these parts of the legislative history show that every conference of the health care bill advanced by senate

democrats, including finally the ppaca, withheld exchange subsidies from noncompliant state, even federal exchanges. it showed that the senate democrats added the restrictive language through exchanges established by the state to their bill throughout the legislative process. it shows that at least some house democrats were aware of this feature and even complained about it before going on to vote for the ppaca and this line which anyway. in 2009, here is basically a sketch of how -- of the legislative history as it relates to these provisions of the ppaca. in 2009, house democrats approved a bill that would have approved a single nationwide program and the subsidies would be available in the state-run exchanges as well. but with explicit language that the subsidies would be available in either type of exchange. the senate with a different story. to hold together all 60 democrats and overcome a republican filibuster, democrats had to concede to the demands of the likes of ben nelson and joe

lieberman that exchanges were run by states. that created another problem for the authors of the senate bill. that is, congress cannot implement state programs, but only create incentives to do so. when they improve the health care bill in september of 2009, it offered health insurance subsidies only in states that helped to implement that bill. it was held subsidies for four years in states that failed to establish exchanges and withheld permanently for states that failed that version of the mandate. republicans offered an amendment that would have given new medicaid subsidies only two states that agreed to establish a republican version of the health insurance exchange. in october, 2009, the senate finance committee approved an offer to build subsidies "solely

through the finances of the state." that is where this came from in the senate finance committee bill. there were tax markups to consider state established exchanges. committee chairman and lead author of the ppaca, max baucus, responded that tax credits are in the jurisdiction and that the purpose was to make the tax credits available. and that is how the senate finance committee was able to direct states to establish exchanges, by making that -- performance of that task a condition of residents receiving those tax credits. democratic senators and senate staff and white house staff convened in majority leader harry reid's office in late 2009 to merge these two committee approved bills, the health bill in the finance bill, together. this was in october, 2009, to create ppaca. they not only retain the finance language to restrict subsidies to exchanges established by the

states, but they also strengthen him and bush. they added another mention of the restrictive phrase to the subsidies and provisions. throughout the process, we have democrats inserting the language, saying that subsidies are available only through established exchanges. the finance bill also originally, when it cleared the finance committee, conditioned tax credits to small businesses on certain health insurance regulations, but the senate dropped that requirement from the ppaca, perhaps because it was redundant. the finance bill also conditioned its subsidies to individuals, which are the ones at issue in related cases, on states enacting the same insurance regulations. an individual subsidies created

a much larger financial incentive for states to act, so there was not any need for them to condition those small business tax credits on those states taking the steps. after they had passed the ppaca in the wee hours of the morning on christmas eve in 2009, house democrats actually complained about this feature of the law. in early january, 20 10, 11 texas democrats wrote to president obama and house speaker nancy pelosi warning that the ppaca feature of the exchanges was likened to the state children's health insurance program, which operates similarly to the medicaid program. if the state is compliant, then they get total fun. if they don't, then their residence don't get any subsidies. -- their residents get no subsidies. they liken it to the children's health insurance program that -- in that unless they were complying, the residents would not see any benefit and "millions of people would be left no better than before congress acted."

veteran npr reporter julie ravner confirm how they interpreted these provisions. she wrote that because they oppose the health bill, they won't create an exchange, leaving residents with no benefit of the improve law. this is the first time they appear to have taken seriously that states might refuse to comply to create exchanges. those who feared resistance warned of the dates ability to block bennett -- the states'ability to lock benefits. after receiving a majority by electing scott brown in 2010, the ppaca became the only bill

that could pass. house democrats, including the 11 members from texas i complained about the feature, and speaker pelosi, to whom the complaint, voted for the ppaca, including its provisions of exchanges established only by the state. this shows us what their intent was. fake give them one choice. you can either pass this bill and what is in this bill for better or for worse, or you can get no health care bill at all. when they voted for the ppaca, they voted for these provisions restricting tax credits, restricting subsidies to state established exchanges, revealing that was indeed their intent even if they didn't like that part of the bill very much. even though democratic senators and staffers have sworn up and down their intent was always to authorize subsidies through federal exchanges, that is not

what their actions show their intent was. and there was reportedly nothing -- i have found nothing in the legislative history that airs on this question. what no one has found in anything in the legislative history showing or suggesting that members of congress voted for the pba ca -- ppaca intended that this law would issue subsidies through federal exchanges. they have had three years to come up with something, some contemporary statement -- contemporaneous statements of legislative history saying, this is what we intend we are putting the slot together. they have come up empty. the only record we have is what congress did.

and what congress did is 180 degrees from from what the obama administration now claims congress wanted to do. with that sketch of the statute in the legislative history, i will turn things over to john adler, who will talk about the cases. and then i will have some concluding thoughts about the political policy and implications. thank you. >> inc., michael. it's a pleasure to be here -- thanks, michael. it's a pleasure to be here. let me say a little bit about how i got into this issue. one of the bigger focuses of my scholarship has been looking at the way the federal government seeks to induce state cooperation, or participation in various federal programs. it is a common feature of the environmental law that the federal government does not want to have to lament all of the key aspects of major regulatory programs like the clean air act or the clean water act. instead, they delegate that

authority to the states. as michael our dimension, there is a problem. the federal government cannot simply tell the states what to do. the federal government can say them a you must enforce these limits -- cannot say, you must enforce these limits in your state. the federal government must and find -- must find ways to encourage the behavior it wants. i have been asked to give a presentation at a health-care conference at the university of kansas in february, 2011, well before the case was before the supreme court. there was no rule on tax credits and exchanges, and nor litigation challenging those rules. i was asked to do a paper on the

way the affordable care act try to encourage state action. in a presentation, i pointed out the language at issue in the current litigation today, the language that provides for tax credits and cost-sharing subsidies for the purpose of qualifying health insurance in exchanges established by the state under section 13.11. as someone who looked at that for years, seeing a statute structured like this is not particularly surprising. we see this in environmental law all the time. we see this in a case in which the supreme court looked at the sort of thing and one of the things the federal government was doing was providing differential tax treatment to private parties based on whether or not states in which those private entities operated in were complying with what the federal government wanted. everyone was using taxes on

private parties as a way of trying to get states to thing the government to and. -- sing the government tune. from that perspective, there was nothing unusual here, nothing in the toolkit that the federal government uses to get states to dissipate and help along. the other thing about -- to participate and help along. the other thing about this conference is scholars, folks working for various federal agencies, and not a single concern was raised that this was somehow an improbable or incorrectly written statute. no one thought it mattered. certainly, no one thought the supreme court would invalidate portions of the medicaid expansion, giving states more flexible and he to refuse to cooperate, and certainly no one thought the states would refuse to create their own exchanges. when the stakes were not very high, it was easy to say, well, this is a statute that congress wrote even if this is not whatever when congress would have wanted. but given the political events related to the election of scott brown and the loss of a single majority in the senate, it was

this or nothing. and so, that is what we got. it was only much later when states started to suggest that they might not create the exchanges and when the irs proposed this rule that this rather straightforward interpretation of what i think is plain and unambiguous statutory text became controversial. even the congressional research service when it was asked to look at this question said that a plaintext reading of the statute would suggest this is all that was authorized. crs knows what we teach in administrator law all the time, that agencies do not have inherent powers. they only have that authority which converts -- congress actually delegates to them. brs cannot issue a single tax credit, let alone -- the irs cannot issue a single tax credit, let alone issue any on others if congress has authorized it.

and as the d c circuit has said for years, the failure to speak to this authority is not a failure of ambiguity, but a failure of the authority to that agency. the d c circuit held that in 1987 in a decision written by judge harry edwards, who dissented. the failure to speak to in agencies authority, the failure to delegate the authority to the agency is itself the absence of a delegation of authority. now we have these suits, these four suits. we have had two competing judgments in the u.s. court of appeals from the ec circuit and the u.s. court of appeals -- u.s. court for the third circuit.

i want to go through the arguments that have been raised in these cases, and that are also being raised in the cases still pending before the district court in indiana and oklahoma. i want to say a tiny bit about what comes next. and then turn it back to michael. the central question in these cases is rather simple -- does the affordable care act authorize the irs to provide tax credits, and as a consequence of that cost-sharing subsidies to the purchasing of insurance in states where changes were established by the federal government instead of the state? we know that congress never pursues its purpose to an incident -- infinite degree. congress always recognizes there are constraints of funds and political realities. instead, we look at what congress actually did. we look at 30 -- section 36 b in the internal code and we see that creditor authorized for insurance in these change by the state established under 1311. ec that it directs states -- and

we can see that it directs states to lay out various requirements for these state established exchanges, including the exchange once it is established must be a nonprofit. we can see that it directs states to lay out various requirements for these state established exchanges, including the exchange once it is as michael already mentioned, the statute defines one of the state to be district of columbia. that is where of the things congress can actually do, define a state in the statute. and that is what it did. we look at section 1321, which is where the authority for the federal government comes from and it says department of human services shall establish, using that same phrase, "shall establish," to ensure that the exchange operates in the same way. that provision, the government has argued, and as the d c circuit has pointed out, it may make them a 1321 exchanges of a 1311 exchange. it may make them an equivalent, but it is still established by the department of human services. both employment which and in actuality -- both in plain language and in actuality, it is not an exchange established by the state. when we look at the way congress refers to exchanges, sometimes this is exchange and sometimes it says as established by the statute, and other times an exchange established by the state. congress could have said exchange everywhere.

and if so, brs would have a lot of flex ability. that is not what congress did. and if so, brs would have a lot of flex ability. congress added qualifiers that limited and help define what is being referenced throughout the statute. and as it turns out, the irs never actually engaged this inquiry when it looked at the statute, but it turns out when one looks at the state, we see that in every place it appears, it is a provision that either serves to provide an incentive for state cooperation, or help facilitate cooperation between state exchanges and, for example, other entities like medicare and medicaid and the like. there's -- congress uses different terms in different places and there is a pattern to his language.

we often refer to this as the chevron two-step. it is a two-step inquiry. did congress speak to the precise question at issue? if so, that ends the matter and "gives effect" to what congress did. we look at the statute and other objective indicators of statutory meaning. and we see whether congress answered this question. we don't have to see what the agency thinks.

the courts are very clear on this point. the laws that congress enacted in the administered procedures act was that the courts answer questions of law, not agencies. the court looks at the statute to see if this particular question -- our tax credit authorized in federal exchanges -- is answered by congress. if so, we go no further. and the court has a clear -- has been clear that the d c circuit has not been very clear over the years. this isn't a game where the agency gets to say, let's see if we hold the statute a particular way or decide to interpret words in other ways, can we find ambiguity? that is not the way we do it. legislators and constituents should be able to read a statute in have some sense of what it means. maybe that is a herculean assumption in some contexts, but in a lot of statutory context, that is somewhat difficult. we understand that states are

risking all of their medicaid money the way the statute is written. required is actually looking across references and satisfying various provisions. if you did not know what those were, you would not want no -- you would not know what they requirements were. here, billing which is very clear. -- the language is very clear.

anyone who looked at this could have seen that it is exchanges established by the state. and if they were curious, they could look up the definition of state in this statute. this is not a skier or hard to understand. -- not obscure or hard to understand. the other thing to understand in this is that complexity does not me ambiguity. ambiguity really means there is some unresolvable inability to determine the precise meaning of the statute or the scope of the statutory term. but it is not just because congress is doing something difficult or, located that it is ambiguous. it just means that the court is reviewing the statute and the

agencies within the statute have to take their time and make sure they focus on what the statute actually says. the other important thing about chevron that is important to remember is that it has not gotten a lot of attention in how they reached the sent in the -- the dissent in the court opinion. the court must also be sure that ambiguity is a -- is evidence of delegation of authority to an agency. ambiguity in and of itself in a vacuum is not enough. because the chevron doctrine is based on the premise that when congress is not fully detailed, it has handed off authority to the agency. it has delegated the authority to the agency to use its expertise to fill in the gaps. to define it more precisely. and moreover, for the agency to exercise that authority, it is still supposed to explain why it is doing what it is doing, why it is breaching the statutory interpretation that it is imposing. and here, one goes to the federal register when the irs finalizes its rule and one find a conclusory paragraph that they say is consistent with the purpose and we cannot find anything that is not. almost every d c circuit opinion that has come out in the past 25 years -- my wife says i'm a bit of a dork and i enjoy reading that sort of thing. it's hard to find any decision that would the something like that, to approach the decision

making. when the epa decides it's going to regulate greenhouse gas emissions, it prepares a detailed memorandum saying white candid -- can interpret it that way. brs gave us no citation -- the irs gave us no citation of the statutorily which or how it reached its decision-making. they did not even engage in the recent decision-making that it should. -- reasoned decision-making that it should. in the public debate about these cases, the argument is often made, well, it would be absurd to condition tax credits on cooperation, because if it turns out states do not cooperate, look at the mess we are in. a couple of quick things to say

about that. first, congress actually does that all the time. what is different here is that states called congress's bluff. we spent a lot of time working on the clean air act. the 36 states tomorrow said, we are not issuing state implementation plans, the epa would have to issue all permits under the clean air act. the air pollution program under the clean air act would grind to a halt. the state of texas by itself conducts more investigations into a facility in a given year than the issue that -- that the epa nationwide. why have we never faced that problem echo because 36 date have never done that. why? because there are incentives not to do so. the state face more stringent revelatory requirements if they do not comply with the clean air act, and they lose a lot of money. not simply money for their own programs, but money for

highways. benefits get taken away if states don't cooperate. medicaid itself, if states called the bluff, they would not meet the needs of needy populations. one thing to point out, though, is that the government in its briefing has not argued that the slang which is a mistake. and it has not read -- has not argued the absurd argument either. and the reason is, the doctrine is pretty clear. -- the document is pretty clear. the government would have to show it is not possible that congress could have drafted a statute that means what the language clearly says. and given that congress has done this sort of thing before, that is a burden the federal government knows it cannot meet. which is why if you read the brief, the federal government is not making those arguments, even

know if you look on the blogs and in the magazines and so on, commentators are. it is important to distinguish between the argument that may sound good in a soundbite versus those that actually have some legal import. there are some other arguments being made. i can respond to questions if folks want to. one other one that is pointing to a law is that, when congress thought to revise portions of the formal care act through the reconciliation process, it added reporting requirements that are expressly repriced -- expressly required in both the 1311 exchanges and 1321 exchanges. the argument is that commerce would not have done this if subsidies were not available in both exchanges because some of the information that must be reported relates to subsidies. there are a couple of problems with this. one is, if you look at what congress did in reference to

both section 1311 and 1321, when congress had its first opportunity to deal with this, it saw the need to edit both state and federal changes separately, not to sweep them together under one simple heading. the other thing that is important to note is that it is undisputed that not everyone who purchases insurance in an exchange gets tax credits and subsidies. there must be eligible the determination. and yet, state exchanges must fulfill these reporting requirements for all people purchasing insurance, in these exchanges, even those not getting subsidies. it's not true that there would be no reporting for folks who don't get subsidies, including the poorest of the working poor, who as the statute is written

and no one has contested are ineligible for subsidies in any state because the statute has to have a ceiling for getting subsidies as well as a floor. furthermore, congress was able to enact all kinds of things in this statute under the assumption that it would not matter because states would cooperate. it wouldn't matter. it matters, because states decided not to walk rate. -- not to cooperate. where are we now? we have these two decisions. the d c circuit held that the statute unambiguously forecloses the irs's interpretation. and the court said, we have exchanges. weaving can see their under section 1311, because 1321 is the kovalev, but they are still not established by states. we will -- is the equivalent, but they are still not established by states. we will not support this. one established that it was ambiguous. one judge on the fourth circuit held that the statute directly supported the iressa's position. only one in -- the irs's position.

only one in the sixth judges held that decision. if the statute is ambiguous and the court should defer to the irs, in the future, it will revert to the statutory language. there is a petition for rehearing en banc in the d c circuit that was fired by the federal government on august 1. the response is due at the end of the week. the administration filed this because it helps to eliminate is split and reduce the likelihood that the supreme court will review this decision. the d c circuit has been very stingy at granting en banc decisions.

and historically have not considered the circuit court to be in a position to grant en banc decisions. that has to between not the position in the past 10 or 15 years or so. there was a petition to file by the plaintiff before the supreme court that could be enacted upon in the fall and could be the decision on why the bc court will take this -- the d.c. court will take this case en banc. i have probably gone on farther than michael wanted me to, so i will stop there. but i would like to wrap up by noting that jonathan and i have been at this for a while and we've been debating these issues. there is really something -- after doing this for a while, you start to notice that there

is something really absurd about these debates. everyone knows what "established by the state" means. i know it means. you know what it means. the obama admin is trish knows what it means. the judges know what it means. and the eligibility rules for the ppaca tax credits, the eligible you rules to find out who congress wanted to get those subsidies to, that is what the illegibility rules say, qualified taxpayers and rolled "through an exchange established by the state." in time -- in trying to establish the agility of the subsidies, the obama ministration look through everything except what congress wrote. they looked to see some ambiguity about what congress meant what it said you have to enroll through it exchanges that

was by the state. but they keep running into brick walls. they keep running into brick walls, because remarkably, there is no inconsistency in the statute. and jonathan and i were surprised to reach that conclusion, like so many supporters of the law. we supported this error with a drafting -- supported this law with a drafting error. and what is surprising is so many people are halting against the irs and it is getting a lot more attention. a lot of people are delving into the legislative history. and many are working their way to the same evidence and running into the same brick walls we did when we started researching this years ago. and the conclusion we reached is actually disquieting. in 2011, the obama administration unilaterally decided to tax and borrow and spend billions of dollars. treasury and irs officials cited

no authority for that decision, and they would later tell federal investigators they knew they did not have statutory authority to do this, but they did it anyway. the impact of that decision has been in enormous. insurers have chosen to participate in the ppaca exchanges who otherwise would not have done so. employers have reconfigured their health insurance benefits, limiting jobs, reducing people's hours, people like teaching assistants and restaurant workers, to comply with a mandate from which they are by law exempt. millions of americans are either paying penalties or have purchased health insurance

coverage to comply with an individual mandate from which they are by law exempt. nearly 5 million americans agreed to enroll in an exchange plan with subsidies that the obama administration had no authority to offer them. as jonathan mentioned, that could be taken with the stroke of a pen. the federal debt rises above the level authorized by law, and that imposes an unauthorized tax burden on not just current, but also future generations. the ministrations decision has also had sweeping impact on the political process. it has denied states and denied voters in those 36 states the use of a policy lever that congress granted them. the ability to veto the ppaca's subsidies, employer mandate, and to a larger extent, the individual mandate, in effect, this decision by the obama administration has disenfranchised voters in 36 states. had the administration follow the law, those changes would have led to changes in the ppaca and maybe even in congress. instead, it has altered the outcome of congressional votes to repeal the ppaca and likely

altered the outcome of a rational elections. it would have exposed the full cost to those enrolled in exchanges and lead to -- which would have led to a backlash against the law. the iressa still influencing congressional elections today by influencing the subsidies, because potential candidates are deciding whether or not to enter races in 2014 or 2016 as if that gaping hole did not exist, as if the lock congress enacted were more popular and successful than it actually is. on july 22, the second highest court in the nation ruled that the obama administration is

violating the law, and not in a small way. with that, jonathan and i are happy to take whatever questions you have will stop thank you. -- whatever questions you have. thank you. [applause] >> we do have time for questions. yes? >> you mentioned that the rs at any given time could issue new regulations for new guidance. assuming, let's say, 2016, there is a republican president, republican house, and republican senate, could they just issue new guidance for a new regulation? flex -- >> what they're supposed to do, not that executive agencies always do this, but they could issue a regulation saying that we no longer believe the proper interpretation of the statutory language is accurate.

tax credit thoroughly available through a state establish exchange. and if the fort -- the fourth circuit ruling ends up becoming [indiscernible] they are perfectly free to change their interpretation. and the premise of that is, that the ambiguity is not a congressional failure to do something, but rather a delegation of authority to the agency and the agency just has to act within the bounds of that ambiguity. unless we were to get a supreme court ruling saying the statute unambiguously authorizes tax credits and federal exchanges, a future administration could do that. >> yes? >> how easy would it be for states to kind of fix this problem if it is upheld kind of as it is and the state says, i do want all my constituents to

lose these taxes -- how easy is it for a stay to say, all right, i'm going to make a couple of switches that will allow the federal exchange to effectively serve as a state exchange? >> it depends on the state. states could create it exchanges. there is some question about whether or not they could still get the federal of subsidies that were initially provided for state creation. and for some states, like in ohio, have enacted constitutional amendment that preclude the state from doing anything that forces someone to acquire health insurance. if that is interpreted to apply to things like the employer or even the individual mandate, it seems like ohio would not be allowed to create an exchange without repealing that. because the creation of the exchange results in tax credits that trigger both the employer mandate and the individual mandate penalties. it depends on the state, how easy that would be. but certain states, politically, this would probably become a political issue in the states, just as medicaid expansion has been. in some states, it is politically popular to want to accept medicaid expansion, and in some states, it's popular to say no, we are not going to take it -- take the money. >> healthcare.gov has proven a creating an exchange is difficult.

a state that wants to create an exchange has to pass a law, generally. it has to appoint a board, come up with a funding mechanism for the exchanges. it has to make sure that these stages operate as they are supposed to operate. it is very difficult to do on its own, even if you have political support. and as jonathan mentioned, there's a lot of political opposition to states doing this. it has manifested itself in laws

being passed preventing states from doing this sort of thing. and i think you have to add to the political calculus in each state -- actually, because of the court ruling the way it did that if a state does not establish an exchange, they are exempt from the employer mandate. they do not have to reduce their workers hours. they do not have to let people

go. they do not have to purchase the mandatory coverage if the state establish an exchange. employers could become a lobbying force against establishing exchanges in a way that they weren't when 36 states decided not to establish exchanges. >> i guess my question is, if it ends up being held up by the courts, what is the finding that has been released? do states have to repay it? do individuals have to repay it? i cannot see the iressa going after everyone you received a subsidy and -- the irs going after the one who received a subsidy and demanding it back. >> you cannot see me iressa with -- the irs being worthless like that. [laughter] if someone received a tax credit in excess of what they are entitled to, they have to pay it back. not all of it and not all the time. there are limits on what people would have to pay back. people could end up having to pay thousands of dollars. what made the obama administration decision so reckless, not only are they taxing and borrowing and spending money they have no authority to touch, but they are using it to induce people to enroll and -- in exchanges that those people could have to pay back the subsidy. those people could get hit with thousands of dollars more on their tax bill. the rs might have the authority not to collect that money. but that is an open question. >> it was reported in the new york times that because the federal government has not been

verifying eligibility for the tax credit on these exchanges that somewhere up to 2 million people have not been able to -- that have received tax credits and subsidies may not be eligible. they have not been able to confirm that. will they actually follow through with that or not? i don't know. but that is a problem that exists in part because eligibility has been hard to verify, and as i noted the way the law is written, there are some weird ink about eligibility. you can make too little to get help. but that is the way the law is written. it is very clear about that. the other thing about that is, the court could have some discretion about whether -- some equitable discretion in terms of the remedies that are mandated, the legal question of whether or not the rs regulation is valid is separate from -- the irs regulation is valid is separate from whether or not it must be enacted. this is why resolution of the issue quickly is important. both the fourth circuit court

and the d.c. court expedited their view in this case. they asked the supreme court to refuse any extension of time request from the federal government. the en banc decision in the d.c. circuit delayed finalization this case because there are still two cases pending in indiana and oklahoma, and there could be others filed. letting people know what they are entitled to or not, leading states and -- leading states understand what the choices are we have and how we are going to make that choice, i would think they would want the issue resume -- resolved finally by the supreme court as quickly as possible. i think the plaintiff's argument have a better shot in the supreme court then in the en banc d.c. circuit. i think that's probably true. but i also think that certainty has a value of itself in this sort of question. and so it's important for us to

know precisely how the law's going to operate. >> i think it's also worth mentioning, even if the i.r.s. or the courts decide people will not have to pay back the subsidies that they received, that doesn't really resolve the injustice involved. that means the cost of those subsidies won't be borne by the individual who received the benefit of that insurance. it will be borne by, you know, that money will be added to the federal debt. we like to treat the federal debt as a great big piggy bank, but that is an implicit tax burden on future taxpayers. someone has to pay for it. there is no answer as to who that should be. which is why this decision was so reckless. >> after the 2012 supreme court hearing that upheld the individual mandate, there's been a lot of speculation that

justice roberts would be doing something that significantly harm obamacare but in that case he said he is essentially defering to the law, saying if the legislators passed something that's bad, it's not our job to strike it down only if it's unconstitutional. in this case, wouldn't the halbig decision be in line with that. because what you're basing it on is the clear statutory -- the letter of the law, that he might be willing to take the -- >> another recurring theme in the debate over these cases is john roberts will never vote to -- would never vote against obamacare in halbig. everyone in this town seems to read john roberts' mind. i am not qualified to do that. i think that he's been unpredictable when it comes to

ruling on these cases. certainly his ruling in f.i.b. was unpredictable. in hobby lobby he voted against the obama administration. he's done so lots of time. often with the unanimous court. often not. i don't know -- i don't know how he's going to rule. in nfib he said it's not the job of the court to protect the people from their policy choices. this is certainly a policy choice that congress made. a lot of people might not like it. the remedy is to fix it through the legislative process, not by executive fiat. you can certainly find support for the plaintiffs' case -- the halbig plaintiff's case in justice roberts' opinion in nfib. i should defer to the law professor on this one. >> as a general matter, when you're challenging the federal government in federal court you assume you're going to lose. it's like betting against the house in a casino. that said, things that don't -- things that make me think it would be a strong case before the supreme court, one, is if

you look at the statutory interpretation question, if this were rising under any other statute, this would not be controversial. we see cases all the time where a single word results in a program being invalidated. in a statute. let alone something that is systematically repeated and cross-referenced, etc. pundits are saying, oh, courts will never do. they actually do all the time. again, look at the brucks' e.p.a. record in the d.c. -- bush administration's e.p.a. record in the d.c. court. look at the supreme court's opinion in the last term where it said a clear statutory term like a number means what it says. pollutant, ok, precise counters of that might be open to some debate. but it's pretty clear. i think established by the state, especially when it's defined is more like 250 tons per year than it is like pollutants standing by itself. the other thing is this is a problem unlike a constitutional problem that can be resolved

not by congress but by states. if the halbig plaintiffs win, states now are in a position of saying, ok, are we going to subject more people to the individual mandate penalty, subject more people to the employer mandate, in return for these tax credits or are we not going to do that? and i would think that the current court would be very sympathetic with saying, that's the sort of choice that is appropriate to let states make. the fact that states might not make that choice the way congress did in 2010, the way congress might want now, the way folks might want now really shouldn't matter because not only can congress fix the statute but states really have a lot to say about how to ultimately -- how it ultimately it affects their citizens. >> hi. first of all, i'd like to thank both of you for the tremendous work you've put into this issue

over the past several years. i'm struck by the same thing michael. every time i see articles by these liberals, they addressed that in health affairs two years ago. i think you guys have been phenomenal on all aspects to this and kudos to you on this. following up on these states' fights which i think will start in earnest next session. i don't think the liberals will wait for a court resolution. i think they'll start major pushes to protect people from the big bad conservatives on the supreme court and things of that nature. and they're going to parade through people who could potentially lose their tax credits and say do you want this person to suffer and so on. michael, i think you're right. we'll be able to fight back by the employer mandate.

in some number of states, the families u.s.a. model, which is pass a bill that, quote, establishes in exchange but immediately delegates all to the federal government, will pass. and i'd like your thoughts on the legality of subsidies flowing in that kind of a regime. we oregonians already doing that so we could see a challenge sooner rather than later. do you think that will pass muster if it's back to the federal government. >> give credit where it's due. thank you, first, for what you had to say about our work. our work appeared in "health mate ricks" which is the "journal of law medicine" -- >> do you suffer from insomnia, 75 pages. >> in fairness to us, it is a law journal. if we made it comprehensible it would have been rejected. [laughter] so the question is, will states be able to just pass a bill saying we established an exchange and kicked all our hard work to the federal government that already has a website and at least some parts of the payment system built in? the answer is that's going to be really tough because the statute is also clear that a state established exchange has

the authority to contract only with a few specified agencies. specified entities. those entities must be subject to the laws of the state. they have to be either a nonprofit that is not a health insurance company or the state medicaid agency. and the federal government does not fit those criteria. the state can't just pass a law that says we're establishing an exchange and the federal government's going to do it all, because under the statute if they do that the secretary doesn't have any discretion. they are not in compliance with the rules for state-established exchanges and establish an exchange for that state so that will be a federally established exchanges, not a state established exchange. we are talking about a post-halbig world where halbig is upheld. so there are legal obstacles. however, there were legal obstacles to offering subsidies through federal exchanges and

they went ahead and did that. so one thing they might try to do, it will be consistent with past practices, to go ahead and do that and issue subsidies in those states that do what you call a families u.s.a. approach and say catch us if you can. now, if halbig is upheld, then presumably an employer or individual in that state who would be subject -- who would face illegal penalties under the individual or employer mandates because of the subsidies that are being issued in that state with a noncompliant state established exchange, presumably they would be able to get relief from the courts. but it has taken years -- two years now almost to reach the apellate court level in halbig and king and so forth and so

that process could get dragged out. it just depends on how the obama administration wants to play that. if they want to try to get away with the same thing twice. >> a lot of it will depend on state law. i mean, some states, clever lawyers might be able to find a way around at least some of the obstacles that michael identified. say your state medicaid agency is established in the exchange and then have it do it and then it subcontracts. the exchange has to be run by this but it doesn't say anything about subcontracts. there might be ways working around it. my own view is, if there are legal ways of working around those provisions, ok. then fine. the law is what congress enacted, not what they wish they had a 60th vote for, three years of hindsight they wish they enacted instead. and my first concern getting -- spending the time on this it's very important that when congress enacts something like this we actually stick what congress enacted. if we don't like it we change it through the proper process.

and so there may be ways around it that are legal. if there are, ok. >> any other questions? well, seeing none, before we wrap up, i think it should be acknowledged, the reason we're here today and the reason this issue is brought to the floor, the great research and scholarship that michael and jonathan did. if halbig is upheld, it will be a victory for the rule of law. you heard not only from two experts who clearly know their stuff very well, but will have paid a large part in that victory. thank you very much for coming. please join me in thanking these scholars. [applause] >> i always knew there was a

risk in the bohemian lifestyle and i decided to take it because whether it is an illusion or not, i don't think it is, it held my concentration. it stopped me being bored. it stopped our people being boring. if i was asked, what i do it again, the answer is probably yes. i would've quit earlier hoping to get away with the whole thing. easy for me to say. it sounds are responsible to say i would do that all again to you. but it is hypocritical. >> the soviet union and the soviet system in eastern europe contains the seeds of its own destruction.

any of the problems we saw the end begin at the very beginning. i spoke about the attempt to control all institutions and control all parts of the economy and political life. one of the problems, when you do that, when you try to control everything, you create opposition and potential dissidents everywhere. if you tell artists they have to paint the same way and one artist says i don't want to paint that way, you have made him into a political dissident. >> if you want to subsidize housing in this country and we want to talk about it and the populace agrees, put it on the balance sheet and make it clear and make it evident. make everybody aware of how much it is costing. one you deliver it through these -- when you deliver it through these third-party enterprises, when you deliver the subsidies through a public company with private shareholders and executives who can extract a lot of that subsidy for themselves,

that is not a very good way of subsidizing homeownership. the 41 are a few of engaging stories now available at your favorite bookseller. >> in a few more on -- moment, a forum with cdc disease detectives. they track and investigate dangerous diseases. health care professionals will then discuss their work in developing countries. after that, deputy national .ecurity advisor ben rhodes